The membership-based mindset of Japanese people regarding work style is an obstacle to reform

Profesor Masaharu Nose, School of Sociology: Novel coronavirus (COVID-19) infections are affecting the working style of people in professions that do not require physical contact. Two important viewpoints when considering changes to how people currently work are the avoidance of physical contact - to prevent COVID-19 infections - and productivity through the introduction of information and communication technology (ICT), which was happening even before COVID-19. Amidst the advances made due to the combination of these viewpoints, companies that have changed their ways of working, mainly in order to avoid contact, will return to their original ways of working after COVID-19, and even productivity-oriented companies will revert to the old ways if they do not make progress with their ICT initiatives. In the end, I believe that the “new normal” of the post-COVID-19 workplace, the changes to how we work, will be greatly influenced by how much progress we make with ICT. What do you think about changes to work styles?

Professor Akiko Ouchi, Institute of Business and Accounting: I believe that COVID-19 will be a great opportunity for companies that are serious about reforming the way they work. Up until now, we have evaluated people who work long and hard in the workplace from the perspective of membership-based employment. With remote work, managers can no longer see the work of our subordinates, and are worried that they cannot evaluate them. If we don't fundamentally change how we address that issue, the post-COVID-19 workplace will end up being the same as before. This is also closely linked how women work. For example, in the past, women who were unable to work long hours, due to childcare or other reasons, were not given the recognition they deserved, no matter how productive they were in a short period of time. There is talk of shifting to job-based employment as part of work style reforms. I think the way that these women work will be appreciated if there are fundamental changes.

Associate Professor Mitsuhiro Urano, School of Business Administration: Reforming the way we work and promoting ICT is something that the government and companies have been trying to tackle for decades, but they have failed to do so. I believe the attitude which Japanese people have towards work is behind that failure. In recent years, as part of the performance-based approach that was popular in the 1990s and 2000s, attempts were made to introduce job-based pay, which is highly compatible with what we call job-based employment today. However, in Japan, where work had been based on a value system that could be described as “membership-based” employment, job-based pay was unable to properly take root. In the future, if we are going to promote working without physical contact, the way we evaluate that activity as “jobs” will be a major issue, which even encompasses the values we hold. I feel that we are now at a crossroads of whether we will just take minor steps, or if we can be serious about making major changes.

Nose: This issue is influenced by the way Japanese people think, their social relationships, and how they connect with each other. The Keidanren recommended job-based employment in 2020, and two years before that, it advocated the abolition of job hunting rules. What underlies all of this is making a shift away from Japanese employment practices. Historically, however, a job-based employment system already existed from the passage of the "Law on the Job Classification System of National Public Servants" in 1950, up until its abolition in 2009. In the 1950s and 1960s, the Keidanren - then the Japan Federation of Employers’ Associations (Nikkeiren) - advocated equal pay for equal work, and attempted to introduce job-based employment. It should be noted that businesses have been advocating a Japanese-style employment system since the end of the 60s. As a result, I believe that today's job-based employment began with the employment portfolio concept in the "Japanese-style management for a new era" published by the Japan Federation of Employers’ Associations in 1995. However, I believe that we will need a Japanese version of job-based employment in the future, not the Western version that is based on so-called “job descriptions.”

Urano: There’s a lot we can learn from history. As Professor Nose: mentioned, although the government and companies have been trying to promote job-based pay since the 1950s, it did not take root due to opposition from labor unions. In Japan, a seniority-based salary system was created during and after the war with a view to supporting the livelihood of workers, but workers thought that a salary system based on lifestyle, rather than work, was more desirable. In 1969, the Japan Federation of Employers' Associations advocated merit-based management, which led to the shift to job-based wages. I think that job-based wages were an easily accepted system, in that they focused on skills that could be cultivated over the years. In 1995, the Japan Federation of Employers' Associations once again recommended job-based wages. I think it will be important to see how workers think and respond to such recommendations by the government and economic organizations.

Nose: Students seem to be aware that Japanese employment practices are fading, but how do they feel about that fact?

Urano: Along with a decline in awareness about continual employment at one company, more and more students want their work itself to be valued, rather than their seniority, and there seems to be a growing preference for job-based employment. On the other hand, membership-based employment is closely related to the bulk recruitment of new graduates, and has protected the employment of young people. In Europe and the U.S., where job-based employment is mainly based on wages, it is easier to protect the employment of middle-aged and older workers who have more experience than younger workers, and youth unemployment has become a problem. With regard to that issue, while middle-aged and older workers have high wages in Japan, it is easy to urge them to retire, which has protected the employment of young people. If we are going to shift to job-based employment, we need to keep the issue of youth employment in mind.

Ouchi: One of the reasons why it is difficult to move to job-based employment is that if work is made completely job-based, then workers will only do the duties described in their job descriptions. However, work cannot be divided so easily, and there are gray areas in between jobs. The question is, who will do that work? For example, in Japan, it is good to help your neighbors if they are in trouble. People who take on such gray areas in addition to their own duties are highly valued, which is what has led to long working hours. If the jobs held by each person are small, there will be large gray areas, but if the individual job descriptions are comprehensive and clearly defined, the gray areas will become smaller. In this sense, it is impossible to transition to job-based employment without conducting a thorough analysis of jobs. However, jobs will change from one year to the next, so job analysis must be conducted constantly, not just once. It is a very difficult task, which is one of the reasons why companies do not do it.

Nose: Job analysis seems to be more familiar in ICT-related occupations, such as application engineers and system engineers in electronics companies. On the other hand, it is less familiar to clerical occupations and other professions. It may be difficult to do so with the Japanese way of conducting business and how jobs are structured. Work is progressing in this day and age with these factors mixed together. I think it is still going to be difficult to only have job-type employment in Japan.

Nose: What do you think about membership-based employment, or so-called "Japanese employment"?

Ouchi: Although membership-type employment is being touted as a bad thing right now, it has its good points, too. There is a lot of work in gray areas, and you can learn the job while helping your fellow workers. By learning about the work of your coworkers, not just the work in your own specialized field, you can broaden the scope of your work and develop your business from a wide range of perspectives. Also, in terms of personnel development, unlike job-based employment, where managers might not provide instruction for subordinates because keeping others down would benefit them, managers train young employees by teaching them, and so on. If we shifted to a job-based employment system, we would be throwing away the good points of the membership-based system. I think it would be better to train people in the membership-based system when they are young, and make their jobs clear once they have acquired skills. If you include the work of training subordinates and junior staff in those jobs, you will be able to develop personnel.

Urano: The membership-based model is also a model for hiring good people and training them, so as Professor Ouchi mentioned, one of its advantages is development. If we change to a job-based model, what will we do about this part of training? This is also a problem for educational institutions such as universities, but if we look at companies, I think Dr. Ouchi's suggestion of using membership-based employment when workers are young, and changing to job-based employment when they become capable of working, is a very good direction. However, from a company point of view, if you switch to a job-based system in the middle of the process, there is a risk that the personnel you have trained up to that point will leave. It is easy to invest in the training of young people if they have lifetime employment, but I think it is important to consider the issue of how much effort a company can put into training them when the possibility of them leaving has increased.

Nose: I've heard that there are some aspects of Japanese workplace social relationships that are effective even in the job-based employment model. How do you think workplaces based on the Japanese style of communal membership and social relationhips will change in the future?

Urano: The idea of workplaces as communities is rooted in the idea that employees should be able to live their lives together in addition to working together, which is why there are family support allowances and company trips, but I think that these trends are gradually fading away. It seems to me that today's students are not looking for that much from companies. For example, whether an invitation from the boss after office hours is work or not, some people may consider that to be a good opportunity for communication, but more and more people do not think so. This shows that we are becoming more job-oriented in our thinking.

Nose: Last October, two intriguing Supreme Court rulings were issued. The decisions call into question how family allowances, bonuses, and retirement benefits will change in the future, as Japanese employment practices undergo changes. One was the decision in the Japan Post case that it was wrong for there to be a disparity in family allowances and other benefits between regular and non-regular employees, and the other was the decision in the Metro Commerce case, which recognized the disparity in bonuses and retirement benefits between regular and non-regular employees. The former was ultimately based on a job-oriented idea of equal pay for equal work, while the latter was based on the traditional Japanese employment practice of securing qualified personnel. These rulings show that modern society has a mixture of job-based employment and communal membership-type employment. Next, from the perspective of evaluation, I would like to consider the expansion of the job model and the old Japanese evaluation system.

Urano: In this day and age, simply looking at work alone will not reveal good ways of working. I feel that we need to start thinking about how we live, including how we work. It is said that the boundary between work and home is becoming blurred, as remote work is being promoted by the COVID-19 pandemic. On the one hand, it allows us to live our lives while switching flexibly between home and work, but on the other hand, it also means bringing work into our homes, which I think is a difficult aspect. In the past, there was talk in the international media about a child coming into the room while his father was being interviewed at home, but now that remote work is being promoted due to the pandemic, it has once again become a topic. The relationship between family and work is a difficult issue, but I think it is becoming more important to think of a way of life that includes both of those elements. Professor Ouchi is an expert in this area, but what do you think?

Ouchi: Remote work during the period when the state of emergency was declared and everyone was staying home was certainly a challenge. Schools were closed and children were at home. But now that the children are elsewhere, such as at daycare or school, I think remote work allows us to work more efficiently. Surveys have shown that conversations in the home have increased and marriages have improved, which is a good environment compared to fathers working long hours and not being at home. Rather than creating situations where the boundaries between work and home completely disappear, parents work hard while their children are at daycare or school, spend time with them when they come home, and have time to work again after the children go to bed. I see potential in such diverse ways of working. There will be more commuting time, less overtime work, and maybe even a return to a healthier lifestyle.

Nose: I believe that the natural inclination of society and the individual is for a society to differentiate itself structurally, while individuals personalize themselves individually, as pointed out by sociologist Georg Simmel. The original way of working has been for individuals to pursue and practice occupations and ways of working that allow them to express their own individuality. As management theory scholar Chester Barnard has stated, it is necessary to have an equilibrium between the individual and the organization. The friction between the individual and the organization that arises in this process will be adjusted through communication and dialogue.

Urano: Do you have specific examples?

Nose: Having a side job or holding multiple jobs, which are becoming more and more common these days, is a very good approach to challenge yourself to do what you want to do. When you actually try to do it, you need to coordinate with society and the groups you belong to. I believe that the way to work in the future will be to express one's own individuality and coordinate with organizations.