salary (Sano, 1995). This shows that even in the incentive scheme, a collective
orientation is still the fundamental consideration.
Recent attempts at reform
Challenges such as the recent economic recession and global competition have
built up the pressure on the Japanese organisation to modify HRM strategies
and practices, although the change is very slow (Benson and Debroux, 1998).
The recent changes can be seen in both government policies and enterprises’
initiatives. From the government point of view, job creation and training have
become the most important issues since 1997. Therefore, the government has
provided a substantial financial support for tackling these issues. In addition,
the Ministry of Labour (MOL) promoted mobility of employees (e.g. the Shukko
Scheme: external mobility; and the HakenScheme: internal mobility) through
government financial support and extended the retirement age from 60 to 65
in order to handle the problem of an ageing population.
From the enterprises’ point of view, reform has been relatively slow. Global
competition, domestic economic restructuring and company internal reorgani-
sation led to a situation of uncertainty and anxiety among both managers and
employees. In the area of human resource management, there are several new
initiatives but key elements remain unchanged. For instance, most companies
adopt two ways of recruitment now. One is the traditional way of recruiting grad-
uates from colleges and universities. Another is a relatively new way of recruiting
mid-career professionals and technicians. Job allocation becomes more skill- and
task-oriented compared with the traditional general-duty orientation.
Compensation is the major area of reform among the majority of Japanese
enterprises. Companies use different methods to implement compensation
policy with a similar goal, which is to promote and reward people who make
contributions to their organisation. The seniority-based pay system has been
gradually replaced by a performance-based and skill/knowledge-based pay sys-
tem (see Watanabe, 2000: 327). There is also a gradual change of the promo-
tion scheme from the traditional age/seniority-oriented promotion system to a
more capability/leadership-oriented system. Promotion now is closely linked
with the annual appraisal and compensation scheme. Following the policy of
restructuring and reorganisation of economy and enterprises, labour mobility
has been increasing in recent years. Many companies adopt Shukko(external)
and Haken(internal) mobility schemes.
However, most HR managers are still playing a passive role. They are not
part of the decision-making team. They are normally required by the senior
management to provide advice and proposals for HR related issues. In most
small companies, the general manager or the manager’s assistant takes up the
HR management function. Trade unions are also facing a challenge. Economic
down-turn has had a profound impact on the well-being of working men and
women. Unions are trying hard to raise their popularity and protect member
workers. Key issues have been addressed by the trade union movement, such
HRM in East Asia 203