Effective rightsizing strategies in Japan and America: Is there a convergence of employment practices?

Abstract

Executive Overview Unprecedented competitive pressures are forcing companies around the world to continually cut costs, restructure, and often to downsize their workforce. In America alone, 3.1 million workers have lost jobs since the beginning of the decade.1 In Latin American and East European economies undergoing a transition from a state-dominated to a market system, privatization brings about pressures for employment reduction. Even highly developed countries like Sweden and Japan, which have traditionally pursued policies of near full employment, have seen unemployment figures increase in the 1990s as a result of restructuring and employment reductions in industry. Nevertheless, there does not appear to be a set of international best practices related to effective downsizing. A leading researcher notes that “human resources management has lagged behind almost all other critical functions…of the global firm.…The range of best HRM practice is wide and appears to vary by economic profile and country culture.”2 In Japan and America, which have been closely observing each other's business practices since World War II, there are some significant similarities in approaches to employment adjustment and rightsizing, suggesting a pattern of international best practice. However, the lessons that can be learned by American and Japanese managers are not the same.