What is Japanese Management?

JAPANESE MANAGEMENT

In the post-World War II era a set of Japanese cultural patterns and managerial practices came to be known collectively as the Japanese management style or Japanese management techniques.

Many of these techniques were credited with helping vault the Japanese economy to its status as the world’s second largest, behind only the United States, and with making Japanese businesses, particularly in the manufacturing sector, more competitive than their international counterparts.

Many observers—both inside and outside Japan—have called into question the effectiveness of some traditional Japanese management practices. As a result, at the dawn of the 21st century Japanese management techniques are more than ever in a state of flux, as scholars and business leaders alike reconsider which practices work and which don’t.

This ambition to preserve the character of the Japanese culture and the autonomy of the economy can be seen in 20th-century practices at both the macro- and microeconomic levels.

In the national economy it is evidenced by long-standing restrictions (direct and indirect) on imports into Japan and the concomitant trade surplus Japan has maintained for years. At the company level, the same motive helps explain the prevalence of the Japanese keiretsu, the large and complex families of interdependent companies centered around their own banks (e.g., Sumitomo, Hitachi, Mitsubishi).

In theory, at least, these firms can avoid “importing” their raw materials, components, or even capital from “foreign” (i.e., unaffiliated) companies by sourcing these goods from within their extensive organizations.

Rooted in these and other historical traditions, some of the other key practices commonly associated with Japanese management techniques include:

v  In-house training of managers

v  Consensual and decentralized decision-making

v  Extensive use of quality control methods

v  Carefully codified work standards

v  Emphasis on creating harmonious relations among workers

v  Lifetime employment and seniority-based compensation

• The Ringi System

The traditional decision-making process in Japanese firms is referred to as the ringi system. The system involves circulating proposals to all managers in the firm who are affected by an impending decision.

Proposals are generally initiated by middle managers, though they may also come from top executives. In the latter case, an executive will generally give his idea to his subordinates and let them introduce it.

Managers from different departments hold meetings and try to reach an informal consensus on the matter. Only after this consensus is reached will the formal document, or ringi-sho, be circulated for approval by the responsible managers.

The ringi system requires long lead times, and thus is problematic in a crisis. In recent years the focus on speeding up decision making has made this approach unpopular at many firms.

Nonetheless, one of its underlying principles remains prevalent. That is, when a decision proves beneficial, the middle-level managers who initially advocated it receive credit; when a decision proves unsuccessful, responsibility is taken by top-level executives.

Japanese managers, in the main, are looked after by the firm. Their job are ensured, their salaries and benefits are guaranteed. American managers, on the other hand, are more likely to be let go if the firm starts running into trouble.