Human Resource Management System Reforms at Matsushita

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Case Details:

Case Code : HROB028
Case Length : 15 Pages
Period : 2001
Pub Date : 2003
Teaching Note : Not Available
Organization : Varied
Industry : Consumer Electronics
Countries : Japan

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Revising the 'Generous' Employment System Contd...

All of them offered to quit by early 2002. Analysts felt that this was mainly because of the 'generous' severance package announced by Matsushita. The company had offered to pay as high as 40 months wages as additional allowance apart from the regular retirement allowance the employees were entitled to.

While Matsushita claimed that the retirement plan was not compulsory, many employees reported that they were continuously being forced to opt for the early retirement plan. In addition, there were media reports of human rights violation at some plants of Matsushita, where the employees were reportedly ill-treated and forced to quit the organization.

'Lifetime' Employment at Japanese Corporations

All major companies in Japan including Matsushita followed the policy of 'lifetime³' employment, which was a distinctive aspect of the Japanese style of management. Under the policy, employees were hired directly from college without any precondition of possessing necessary job-specific skills. Rather than hiring experienced people, companies preferred to hire fresh recruits from college and mould them into their culture.

They were employed until the mandatory retirement age, which varied between 55 to 65 years. Moreover, leading corporations in Japan offered their retired employees the opportunity to work for another ten years in their satellite offices⁴. Companies in Japan never laid-off employees even in the worst economic conditions.

They tackled adverse situations by reducing overtime, stopping pay hikes and new recruitment. For instance, none of the automobile companies in Japan resorted to layoffs though the overall production declined by 8% in the late 1990s...

Excerpts >>

3] Some analysts felt that the word 'lifetime' was misleading, because employment did not last for a lifetime. People in Japan, after different levels of education, got into jobs which they never changed. It was almost impossible to find a job in the middle of one's career or change jobs in Japan.

4] Satellite offices were offices set up far from the major centers of a company and were all linked through the satellite to the main office. These offices were mostly used for routine back office jobs. The creation of satellite offices was based on the geographical separation of front office and back office jobs.