The formation of job- and competency-based human resource management in Japan

Abstract

This paper examines the formation of job- and competency-based human resource management (HRM) in Japan, drawing on oral histories from the steel industry to trace the path of development. At Nippon Steel and Nippon Kokan, the personnel systems evolved from the prewar academic background-based status system to the postwar academic back-ground-based status system and finally the competency-based grade system. The process of shedding the postwar academic background-based status system required the concept of competency, which established its foundation due to two contributing factors. First, the existence of job-based wages brought the nature of specific jobs into clearer light. Second, recruiting high school graduates for blue-collar jobs created uniformity among the workforce in terms of academic background—and that enabled assessments on competency-based, not academic, criteria. Middle school graduates and university graduates came from altogether different academic backgrounds, but high school graduates came in with similar levels of knowledge—a prerequisite for applying work-oriented criteria. Despite those similar trends, Nippon Steel and Nippon Kokan would then embark on different paths in developing their respective personnel systems. Whereas Nippon Steel essentially perpetuated its job-based wage structure, Nippon Kokan converted its existing job-based wages into competency-based rates—and the difference emanated from the companies’ HRM policies.