Can Japanese Management Techniques Be Applied to American Small Business

Abstract

CAN JAPANESE MANAGEMENT TECHNIQUES BE APPLIED TO AMERICAN SMALL BUSINESS? INTRODUCTION In recent years management techniques have been very much in the limelight in the United States. Much has been written extolling the high productivity and efficiency of industry and the equally high quality of its products. The key to this success is said to be a unique form of management practice, involving methods very different from those used in the United States. Some authors argue that managers would achieve similar success if they were to adopt these techniques in their own companies. Others contend that the corporate setting and its cultural environment are unique, and that techniques that work in Japan are not transferable to companies. Furthemore, these discussions about tranferability virtually always focus on whether or not these practices can be applied in large firms, with little thought being given to their applicability for small businesses. The various management techniques that have been so highly publicized in recent years are surveyed here, followed by an examination of the degree to which small businesses use these techniques, and an assessment of their possible value for small businesses. THE JAPANESE MODEL The so-called Japanese Management Style is in fact a complex set of basic organizational properties common only to certain companies. Nevertheless, writers on the subject have attempted to break it down into a number of individual characteristics, so that it can be more easily studied and evaluated. Seven of these characteristics stand out as being in strong contrast with the typical American Style of management. Lifetime Employment is perhaps the most publicized of business characteristics. Employees are hired directly upon graduation from high school or college, and are retained until a mandatory retirement age of fifty-five (this is waived for top-level managers). Employees are terminated before normal retirement age only under the most extreme of circumstances, such as criminal behavior. Upon retirement, an employee will receive a large severance payment, and may be placed (at a lower salary) in a position in a satellite firm of the company (a smaller supplier, for example). The effect of this policy is very high employee commitment to the company. The Evaluation and Promotion process of the model also contrasts strongly with practice. The process is a very slow one; a new hireee may go ten years with automatic pay increases and promotions (along with all others hired at the same time) before a formal evaluation of his performance is made. Only after this evaluation do promotions and pay increases vary among employees. The result of this practice is a long-term management outlook toward the employee and an attitude of cooperation and non-competition between employees, resulting in individual performance aimed to serve the company rather than oneself. Non-Specialized Career Paths and Lifelong Job Rotation are also basic to this model. There is continuous job rotation during the ten years before the formal evaluation, and this rotation continues after evaluation through various promotions. While this results in employees having less specialized expertise, it also means that someone ine one department of a firm is always familiar with any other department, the effect of which is a high degree of cooperation and coordination between the various departments and an organization-wide viewpoint among the company's managers. The Participating Approach to Decision-Making is another characteristic of the model well known in the United States. In the firm, everyone who will feel the impact of a decision is involved in making it. One person, or perhaps a small group of employees, will be responsible for developing a consensus. …