Introduction
Corporate culture is defined as rules, values, beliefs, and norms, which are shared by all stakeholders of the firm. Norms influence the individual’s preferences and behaviour in the organisation. Culture is present in every organisation and it develops as company grows (Sarra and Nakaghigashi 319). It determines the conduct of workers in an organisation coupled with how a firm conducts its business.
Numerous researches on corporate culture have been carried out and the findings indicate that the nature of corporate culture can influence business’ performance either positively or negatively (Kubo and Saka 271). Experts have proposed certain factors that a corporate culture should embody in order to improve economic performance of the company.
A good corporate culture should be based on the needs of all stakeholders, employees, customers, and investors (Batyko 17). The culture should be tested for its fitness in the business environment in addition to being flexible to accommodate changes.
Flexibility of corporate culture is significant as the business environment keeps on changing and such changes should be reflected in the culture if a company has to flourish in a competitive market (Rashid, Sambasivan, and Johari 727). Corporate culture becomes obsolete with time, and thus it should be revised regularly.
A corporate culture might lead to success of a business for a given period after which diminishing results are observed. Research indicates that a strong corporate culture, which is compatible with the business environment, will lead to increased profits for the firm (Lund 219). Corporate culture is thus an important aspect of business and it cannot be ignored in the contemporary business world.
The Japanese corporate culture is based on the values that were laid down by Konosuke Matsushita – one of the most famous ancient entrepreneurs in Japan (Batyko 18). The entrepreneur identified customers and employees’ needs as the major components of corporate culture. However, corporate culture should be consistent with the environment within which the business operates.
The entrepreneur also emphasised on the need for good relationship among employees, as well as their inclusion in major decision-making process. This essay will analyse the nature of corporate culture in Japan, identify its strengths and weaknesses, and determine whether it helps or hinders companies’ performance.
In this paper, the corporate culture in Japan will be analysed thoroughly and a conclusion will be made on whether it promotes the success of companies in the country. Analysing the corporate culture in Japan, the essay will classify the companies into two: the large and small companies
General overview of the Japanese corporate culture
The Japanese culture of management stands out clearly in large corporations. Management is obliged to create a culture that supports the inclusion of workers in every undertaking (Rashid, Sambasivan, and Johari 726). The aim of inclusions of employees in every undertaking is to maintain a culture of harmony among the stakeholders of the company.
The management of the companies are expected to treat their workers with due respect and provide the best incentives to ensure that employees remain committed to delivering quality services.
Most companies in Japan are focused on attaining the best quality of products to satisfy the needs of the customers. In a bid to achieve this goal, they recruit the best employees and offer them competitive salaries to maintain them and win their loyalty.
In additional to inclusion of workers in the decision-making process, proper communication is embraced. Any problem arising in the course of carrying out business is resolved immediately (Cooper-Chen and Tanaka 98). Communication between workers and the management is maintained all the year round and is characterised by frequent feedbacks. For a corporate culture to be effective, the employees’ needs should be addressed.
Communication creates a venue through which employees can air their grievances to the management. Communication further creates a good relationship between the managers and employees, which is essential if the company is to achieve its goals.
The customers’ needs should be considered when formulating a corporate culture. Customers require high quality goods, which retail at reasonable prices. In other words, customers will remain loyal to firms that give value to their money.
Employees’ incentives and work environment
The employees’ working conditions in Japanese companies heavily depend on the size and nature of the firm (Lee and Yu 357). Employees in large companies enjoy better working conditions than those working in smaller ones. The large companies are more efficient than the small ones due to the motivation created through the provision of favourable working conditions to workers (Rashid, Sambasivan, and Johari 725).
Employees work for more hours in large companies than in small companies. This aspect means that the output in large companies is higher than in small companies. In addition to the basic salary, workers are compensated for the overtime hours worked (Kubo and Saka 266). This aspect creates a further incentive for workers in large companies to work for additional hours to earn extra income.
In the process of devoting more time to work, the output increases, thus leading to extra profits for the companies. Statistics show that the working hours in large and medium sized companies in Japan are more than 12 hours a day (Sarra and Nakaghigashi 329).
Some employees are in support of the long working hours, while others are reluctant to embrace it. Those opposing the long working hour-schemes assert that subjecting workers to long working hours is tantamount to exploitation, and it is against the workers’ rights (Lund 219).
Some scholars claim that companies will initially receive brilliant results for the additional time devoted by workers in the short run, but it will have diminishing results in the end due to fatigue (Batyko 19).
Companies offer incentives for workers seeking for permanent jobs by availing higher salaries to the permanent employees as compared to casual labourers. Many employees will thus sign agreements for permanent jobs with the companies.
The corporate culture in Japan’s large companies tends to exhibit certain similarities. The Japanese job market is based on the “simultaneous recruitment” and “lifetime employment” models. Most large companies in the country subject their employees to long working hours in a bid to improve performance (Kubo and Saka 270).
On the other hand, the employees enjoy numerous employment benefits from the companies in order to remain motivated. Job security is guaranteed under the lifetime employment model and an employee may only leave the company at his or her own discretion.
Job placement is based on skills and educational background and only the best employees are selected to occupy vacant positions (Rashid, Sambasivan, and Johari 728). Each employee has the responsibility of working industriously and demonstrate loyalty to the employer. The companies have an appealing incentive scheme for employees and graduates.
Firstly, the companies pay their employees competitive salaries coupled with giving job security guarantee. Additional benefits that accrue from employment include housing benefits, life insurance, bonuses, pensions, and recreational facilities among others (Cooper-Chen and Tanaka 104). Secondly, the best workers receive promotions, which come with increased salaries and additional benefits.
The benefits given to workers ensure that companies retain the best workers, thus increasing efficiency, which results in greater profits and increased chances of success. Bonuses are also afforded twice per year, viz. in the mid-year and at the end of the year.
The culture of subjecting workers to long working hours came into existence in the 1920s when it was noted that human labour is an important factor of production in large companies (Batyko 12). However, the scheme has faced opposition from labour unions, thus forcing the companies to reduce the working hours for their employees.
Corporate culture in small firms differs greatly from that of large firms. In smaller companies, new employees are recruited as unskilled workers and put under a senior skilled supervisor to teach them (Batyko 13). Such employees spend long periods learning from the experienced supervisors. They are exposed to deep learning of concepts in specific areas as opposed to shallow, but broad coverage seen in large companies.
Employees in smaller companies use smaller tools to accomplish their tasks and due to repetition and specialisation, they may produce high quality goods using simple tools (Batyko 17). In most cases, the small companies’ products are used as raw materials in large companies and they rarely sell them directly to the consumer.
Labour unions
Despite the workers being free to join labour unions, there is a link between companies and the labour unions (Sarra and Nakaghigashi 329). Unions are denied the right to exist as separate entities, and thus companies and labour unions are two inseparable set ups (Kubo and Saka 266). The independence of the labour unions is thus compromised and they cannot achieve a lot.
The corporate culture in Japan is successful in eliminating labour strikes, and thus it is rare for employees to go on strikes especially due to the connection between companies and the labour unions (Makino and Roehl 40). In addition, employees are committed to the company they work for, and thus they may not be willing to harm the economic wellbeing of the firm.
Management corporate culture
Another aspect that defines corporate culture in Japan is the aspect of management (Rashid, Sambasivan, and Johari 722). Companies in Japan recruit managers who have the right skills to manage a workforce for the success of the business. The majority of companies in the country have adopted an all-inclusive leadership style (Lund 225).
In other words, managers exercise a democratic leadership style that accommodates the inputs of workers in the decision-making process. Decisions are based on a consensus, and thus it is not a one person’s mandate. The inclusion of workers in the decision-making process instils a sense of inclusion and recognition among employees.
Workers also feel motivated working on targets that they have created. Employees also tend to compete in terms of performance in various departments in a bid to please their employers in order to win promotions. In addition, the inclusion of workers in decision-making brings employees together, thus creating a culture of harmony and teamwork, which may go a long way in improving performance.
In addition, managers show concern over the employees’ personal lives; hence, they do not just issue orders to workers (Kubo and Saka 264). This scenario creates a good relationship between the management and employees promoting motivation and understanding. In a recap, the leadership of major companies in Japan plays a key role in the success of their businesses.
Proposed changes to Japanese corporate culture
Researchers have proposed various changes to the Japanese corporate culture. Among those changes is the mobility of labour (Kubo and Saka 270). The nature of employment in the country is based on a lifetime employment. Employees remain in a given company for the entire live until they are incapacitated and they cannot deliver.
This aspect is a great barrier to labour mobility; hence, new ideas believed to come with mobility of labour are excluded in the workplace. Another proposed change is the structure of management. The representatives of management of companies in Japan are reluctant to take new risks, as they are opposed to changes in the organisation structures (Lee and Yu 351).
They are reluctant to recruit foreign workers into their firms and they cannot risk mergers and acquisition (Lund 219). The management should create a reward system for employees for their hard work, innovation, and inventions (Rashid, Sambasivan, and Johari 720). They should create a committee within organisations to scrutinise new investment opportunities.
In addition, there should be sufficient incentives for managers to take risks. The proposals for changes in corporate culture started over three decades ago.
In the 1980s, some large companies were convinced of the need for change in the corporate structure and they laid off some of their workers only to replace them with other modern methods of increasing production such as promotions, which they believed would boost their sales even when the quality was not high.
Inward attitude nature
The Japanese corporate structure somehow does not provide room for merge and acquisition (Sarra and Nakaghigashi 307), due to the emphasis made on the inward outlook of companies. The Japanese companies insist on individual success, and thus they overlook the benefits that may accrue from restructuring. The problem is further compounded by the view that the tax rates for some forms of businesses are prohibitive.
The tax levied on partnership businesses is high, thus preventing businesses from merging to create such forms of businesses and pool resources together (Rashid, Sambasivan, and Johari 718). Japanese investors also rarely welcome outside investors into their businesses due to the inward attitude that exists.
They insist on quality of goods and services in a bid to ensure customer satisfaction and improve the working conditions for their workers, thus overlooking the importance of businesses coming together for some common purpose through mergers and acquisition, which would go a long way in mobilising resources and lowering costs of operation (Kubo and Saka 265).
Therefore, the Japanese corporate culture should embrace diversity as it allows organisations to maximise on disparate ideas of people coming from different regions across the world.
Critics
The corporate culture in Japan has been criticised for its inflexible nature. Critics argue that the nature of the Japanese corporate culture today is a major hindrance to the development of small and medium size companies. The culture is inflexible, as it does not allow major business developments such as merger and acquisitions.
On the issue of merger and acquisition, the corporate culture is not compatible with such restructuring undertakings, which characterise the contemporary businesses across the world. The Japanese corporate culture emphasises the inward outlook, vertical integration, and provision of quality products for customers. It ignores outsourcing where certain services can be sourced from outside the organisation (Lee and Yu 349).
The other critic is the overreliance on the academic community (Lee and Yu 341). The culture only believes that major invention and innovations can only be achieved through employment of academic principles (Sarra and Nakaghigashi 309). This idea is contrary to other ideas in other countries like the US whereby innovation and invention are believed to come from industrial experiments (Lund 223).
The Japanese corporate culture also faces criticism due to its emphasis on long job tenures in an attempt to maintain the original workforce (Lee and Yu 348). This aspect is a great barrier to labour mobility, which according to critics leads to the introduction of new ideas in an organisation coupled with increasing competitive intensity (Kubo and Saka 269).
Critics also argue that the number of women in leadership in Japan is less than required under the current corporate culture.
Research based on the leadership trait theory indicates that women leaders possess up to five out of nine traits that are important to leadership, and thus barring them from attaining leadership positions is a factor that contributes to failure of Japanese companies. The alleged five traits are said to be inborn in female leaders, and thus they are believed to deliver more in leadership positions as compared to men.
Communication and decision-making
In the Japanese corporate culture, the term “ringi” is used to refer to the process of acquiring inputs from stakeholders before making a decision (Sarra and Nakaghigashi 299). The term is made up of two parts, viz. “rin”, which refers to the act of submitting a proposal to the authorities or those higher in the hierarchy, and “gi”, which refers to the process of discussions and deliberations (Lee and Yu 343).
In the Japanese corporate culture, a decision must be reached through consensus and not by one person. Employees make proposals to their supervisors on certain key issues through a document referred to as “ringisho”, which is similar to a circular and it is circulated to all the stakeholders (Kubo and Saka 267).
The proposal is peer-reviewed and those involved show support or rejection of the idea by appending a seal on the document. The document finally reaches the top management and the proposal is either upheld or rejected. The originator of the idea must be notified of its acceptance or rejection. If rejected, one is given the opportunity to make changes to the document and repeat the procedure.
This aspect ensures that everyone in the company is involved in the making of key decisions. This involvement is healthy since everyone will work on a decision he/she has made. The corporate culture in Japan thus includes the interest of its employees, which is necessary for an inclusive corporate culture.
Comparison with other countries
One of the factors that makes the Japanese corporate structure unique is the decision-making process. In Japan, consultations have to be made with all stakeholders, and thus a lot of time, which could be used in production, is wasted (Lee and Yu 347). This aspect comes out as both strength and weakness. It becomes strength since decisions are made carefully and the probability of achieving the set target increases.
This aspect is in contrast with the decision-making process in other countries whereby the process is executed under the watch of those in management, and thus less time is wasted and quick decisions are made (Lund 223). However, in instances where such decisions are quickly made, chances are that slight mistakes may occur, thus leading to less achievement.
Contrary to corporate cultures in other countries, the work life in Japan is more essential than personal life (Kubo and Saka 268). In Japan, a series of meetings is held even during out of duty hours to deliberate on certain issues concerning the company.
An example of such an after-work meeting is the Nomikai party held occasionally to bring together the management and employees to discuss the way forward for companies (Lee and Yu 341).
This scenario is different from other countries, where there is a balance between work and personal life and few after-work meetings are held. Additionally, Japanese employees are encouraged to remain in a company through monetary rewards and promotions (Kubo and Saka 262). The more a worker stays in a specific company, the more his/her salary is.
The Japanese managerial style is different from companies in other countries. The nature of management in Japanese companies emphasises a bottom up flow of information as opposed to a top- down flow, which is evident in most other countries (Lund 219). The Japanese corporate culture allows employees to formulate policies for companies.
Managers cultivate good relationship with their subordinates in a bid to create a culture of harmony in companies. The harmony created is healthy for companies for when workers work in teams efficiency is boosted, which in most cases results in huge profits. The role of decision-making is given to subordinates who place their suggestions to the top managers for consideration in making key decisions.
Conclusion
Corporate culture determines the success or failure of a business. Therefore, businesses should adopt a corporate culture that best favours the organisational operations. A good corporate culture should include the interest of all stakeholders coupled with being compatible with the business environment.
Compatibility of the corporate culture with the environment is a major determinant of the businesses’ success and research indicates that a weak, but compatible corporate culture can outdo a strong corporate culture that is incompatible with the operational environment (Lund 219). The corporate culture in Japan differs greatly from corporate cultures in other countries.
In Japan, workers are retained for lifetime as long as they can deliver effectively. In a bid to keep employees, competitive salaries and other fringe benefits are availed.
However, the system of corporate governance in Japan is criticised for its shortfalls, which include management style that does not encourage innovation and invention. It has also been criticised for its inflexible nature that does not provide room for changes. Overall, the Japanese corporate culture promotes organisational performance, because its merits overrule its demerits.
Works Cited
Batyko, Richard. “The Impact of Corporate Culture on Public Relations in Japan: A Case Study Examining Tokyo Electric Powerand Toyota.” Public Relations Journal 6.3 (2012): 1-19. Print.
Cooper-Chen, Ann, and Michiyo Tanaka. “Public relations in Japan: The cultural roots of Kouhou.” Journal of Public Relations Research 20.1 (2008): 95-114. Print.
Kubo, Izumi, and Ayse Saka. “An inquiry into the motivations of knowledge workers in the Japanese financial industry.” Journal of Knowledge Management 6.3 (2002): 262-271. Print.
Lee, Kim, and Kelvin Yu. “Corporate culture and organisational performance.” Journal of Managerial Psychology 19.4 (2004): 340-359. Print.
Lund, Daulatram. “Organisational culture and job satisfaction.” Journal of business & industrial marketing 18.3 (2003): 219-236. Print.
Makino, Shige, and Tome Roehl. “Learning from Japan: a commentary.” Academy of Management Perspectives 24.4 (2010): 38-45. Print.
Rashid, Abdul, Murali Sambasivan, and Juliana Johari. “The influence of corporate culture and organisational commitment on performance.” Journal of management development 22.8 (2003): 708-728. Print.
Sarra, Janis, and Masafumi Nakaghigashi. “Balancing social and corporate culture in the global economy: the evolution of Japanese corporate structure and norms.” Law & Policy 24.4 (2002): 299-354. Print.