THEORY 'Z'

WHAT CAN BE LEARNED FROM JAPANESE ORGANIZATIONS

Keys to success: Growing productivity

Import of technology
Distinctive work ethic (other values)

But even more importantly: A different administrative approach.

Japanese companies in the US use a modified style for the North American reality.
Not only in the financial and operational aspects, but also regarding personnel.
Many American companies have failed in trying to impose the American system in the
Japan. The cases of successful companies are precisely those that have not done so, like the
case of McDonald’s and IBM.

The fundamental difference in organizational systems is neither in the formal structure nor in
the size nor centralization.

Characteristics of the Japanese Administration System

Lifetime employment:

The norm is that a Japanese company hires once a year. Those who join
the company has their job secured until they are 55 years old, at which point they must retire if not
they belong to the high administrative levels.

They receive an amount equivalent to about five years of salary. To understand better the
the system should analyze a bit of the history of Japanese companies up until before World War II.
World War. They were grouped in structures called Zaibatsu.

A Zaibatsu was composed of a group of 20 to 30 large companies from various sectors.

gathered around a powerful bank. From each of these companies hung many
smaller companies, or satellite companies, that provided specific services to the larger ones,
establishing a Bilateral Monopoly in which each satellite company worked exclusively
for the larger company and this, in turn, only hired the services of the smaller one.

Bilateral monopoly does not occur in the West, as there is a distrust regarding having a single one.
supplier of some input. In Japan, that does not exist, which turns these monopolies into a
a factor that significantly increases productivity. Although the Zaibatsu ceased to exist after
of the War, its spirit was preserved.

Japanese companies finance their own social security system in which they do not participate.
directly the government. The employees who are retiring at the age that corresponds
to do it, they are being relocated to smaller companies, either in satellites or companies
adults as appropriate and continue to provide their services for another period. The chain
It is Bank-Companies. Large-Companies. Satellites. Only those that withdraw from companies. Satellites have nowhere to go.
to be relocated. On the other hand, the Ministry of Interior Industry and Commerce is the one who can locate
to its retired employees in a bank.

In this way, a marked stratification is generated among companies, which leads to

a high stratification in educational institutions, as accessing an education of
excellence and, therefore, entering imperial universities ensures an important position.
Education is a matter of vital importance for the Japanese, who train and prepare their
children from the early years to gain their access to these universities.

Factors that make lifelong employment possible:

 - Payment of a semiannual bonus, as compensation, which depends on performance
from the company (corresponds to between 5 and 6 salaries per year), which constitutes a strong
incentive to feel part of the organization. It is proportional to the results of the
company and not to individual factors.

- There are many temporary employees, mostly women, who are laid off.
the bad times. These serve as a buffer to protect the work of men
they are lifetime employees.

- Satellite companies receive service contracts that are more susceptible to

fluctuations, then they are the ones who bear the impact of bad times.

The combination of these factors reduces uncertainty and allows male employees
enjoy your lifelong work. Other factors: Trust, Loyalty to the firm, Commitment of
Individual to their work. (They are based on Theory Z.)

2) Evaluation and Promotion

Another fundamental difference of Japanese organizations lies in their approach to evaluation and
promotion. The evaluation process is extremely slow, taking up to 10 years for
An executive receives an important promotion. During that period, people at the same level
they will receive the same promotions and salary increases.

The slowness of the process hinders short-term corporate games (although it does not eliminate them).
completely). An attitude open to cooperation, performance, and evaluation is fostered,
well, it favors the possibility that the actual performance level will finally come to light. The
young executives are not attracted to building a career at the expense of others, nor to pressuring to
that decisions be made.

The distribution of physical spaces in a Japanese office supports that attitude towards the
performance evaluation. Huge rooms where everyone works together and everyone is
aware of what others do.

The slowness in the formal processes of evaluation and promotion seems completely unacceptable.
for North Americans, not only because they desire quick feedback and progress, but
because it seems to prevent important positions from being assigned to the most capable
principle. They also point out the incongruence between formal titles and real responsibilities: the
more skilled individuals quickly receive responsibilities, however, promotion only comes
when they have demonstrated more deeply what they are capable of doing. On the other hand, the
who have already proven their ability and contributed to success in the past are assured the title and a
better salary, despite the threat posed by someone younger.

How can young employees be encouraged to willingly accept these greater responsibilities?
without a proportional remuneration? Through the working groups. They belong to several groups
at the same time, it generates a strong sense of belonging and commitment that have an impact on their
behavior. The support and approval of their peers is a factor that affects
powerful attitudes, motivation and behavior, more than salary, promotions and control
hierarchical.

The Japanese organization only accepts young people who are still in the formative stage of
his life, makes them participate in multiple groups and, in this way, instills in them the feeling of
solidarity and camaraderie.

The transcendental thing then is not the reward or evaluation, but the subtle impression that it leaves.
individual among his peers, whom it is impossible to deceive.
3) Non-specialized professional paths (Trajectory)

A very important characteristic: they are able to develop individual careers.

The Japanese system does not have individuals with detailed knowledge of an industry.
specifically, rather uses the constant rotation of positions to ensure that its executives are high
level being experts in harmoniously relating each function, specialty, and office of the
company.

Weakness of the system: the lack of area experts.

Studies conducted showed that in the USA, the trajectory of top executives indicates that they do not
they have performed more than two functions on average. This has the problem that, when
To develop a whole life in a specific area, one can lose sight of the needs.
global of a firm and focus on that specific field.

In the USA, one builds a career in various groups, but in the same specialty; in Japan, one
makes a career in various specialties, but in a single organization. Then, the executives
Japanese people are not worried about having to look for work as they have it secured. The
Japanese do not specialize in a specific field, they specialize in an organization, in
learn how to make a unique and specific business work as well as possible.

Japanese companies do everything in their power to instill in their staff a

feeling of loyalty, ensuring that they receive fair and humane treatment. A lot is invested
more in training.

The most respected leaders are those in charge of the staff, a radically different situation.
opposite to that of American organizations.

Strong and weak aspects of both approaches regarding career development:

American approach:
- Advantages: Ability to organize its experts into a coordinated workforce.
Facilitates industrial production.
- Disadvantages: Lack of deep integration among its workers.

THE OPERATION OF A JAPANESE CORPORATION

Unlike the North American system, which is based on the establishment of specific objectives.
intended to evaluate performance, the basic control mechanism in Japanese companies
it is encompassed in a management philosophy that describes the objectives and procedures
aimed at achieving them.

The objectives represent the values of the owners, employees, customers, and authorities.
governmental. The procedures to achieve these objectives are determined by a
series of beliefs regarding the type of solutions that should be taken and that tend to yield good results
results in the industry or in the company. Those who manage to capture the essence of this philosophy of
values and beliefs, can infer a number of specific goals that fit the
changing conditions. These goals will be consistent among different individuals.

This theory is based on an organizational culture, which is a set of symbols, ceremonies.

and myths that communicate to the staff of a company the most ingrained values and beliefs of
the organization. This culture develops when employees have a wide range of
common experiences that allow them to communicate a multitude of subtleties with each other and generate
a coordination environment that significantly facilitates decision-making.
The decision-making process

The most notable aspect: participation in the decision-making process. It is different from the style of
setting objectives in a participatory way. (No more than 10 people).

In the Japanese case, everyone who will be directly involved in the decision participates.
There can be many. Usually, a team of 3 people is in charge of talking with
everyone until a true consensus is reached. Despite the longer time required,
There is a greater likelihood that everyone will fully support the decision.

When an important decision must be made, the preparation of the proposal is entrusted to the
younger and less experienced person. In this way, vitality is not lost nor is it lost the
change process. Of course, the executives know what the best decisions may be and
the young man strives to the maximum to find them. The same values and beliefs are instilled.
mistakes generate, in addition, good ideas.

This process takes place within the framework established by a philosophy, beliefs, and a
harmonically shared values, which justifies why so many people participate fully and
effective results are achieved.

Another characteristic: ambiguity in the definition of responsibilities in decision-making.

In Japan, no one has individual responsibility for a particular area, but rather a group does.
assume joint responsibility for tasks. A very important reason that justifies the
collective assignment of responsibility is that bottlenecks are avoided when one of the
employees cannot fulfill their part of the work.

Collective values
It is the aspect that seems most incomprehensible to Westerners: orientation towards values.
shared, especially the collective sense of responsibility.

Examples indicate that Japanese workers feel uncomfortable about the idea of acting.
individually to improve production. This collectivism is not a goal for which one has
neither a corporate goal to achieve, rather, it is a natural process that makes it so that not
nothing significant happens as a result of individual effort. Anything important is
it derives from a group effort.

Holistic interest in the individual

Holism: an integrated whole has an independent reality and is greater than the sum of its parts.

The Japanese company forms inclusive relationships. A series of mechanisms provides the
social support and the necessary release to maintain emotional balance.

Social and economic life is integrated into a unique whole, then the relationship between individuals is
intimate. There are multiple bonds that unite them.
JAPANESE COMPANIES COMPARED TO NORTH AMERICAN ONES

Models (abstractions of reality):

JAPANESE ORGANIZATIONS NORTH AMERICAN ORGANIZATIONS

( Type Z ) ( Type A )

Lifetime employment Short-term employment

Slow process of evaluation and promotion Quick process

Non-specialized careers Specialized careers

Implicit control mechanisms Explicit control mechanisms

Collective decision-making process Individual decision-making process

Collective responsibility Individual responsibility

holistic interest Segmented interest

North American Companies

- High employee turnover (4 to 8 times more than the Japanese)
- Limited training of staff

A different tradition

Japan has a lifestyle that reflects the image of a nation whose inhabitants maintain a
homogeneity in terms of race, history, language, religion, and culture. They had to learn to
to survive and to work together in harmony. Thus arose a transcendent social value: the importance
of the individual as a human being, that is to say, to subordinate individual preferences to the well-being of the
group and know that personal needs will never take precedence over the interests of others.

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