Personnel Management in Japanese Business Enterprises

The purpose of this paper is to clarify the characteristics of personnel management in Japanese business enterprises after the Second World War, and, specifically, after the Korean War (1950-1953). When we look at the historical development of Japanese personnel management in retrospect, we find that it has changed before and after 1965. To explain this more concretely, we will point out the transition of a Japanese personnel management system based on seniority to one based on ability. We can therefore look at the year 1965 as a kind of watershed in the history of Japanese management, because it was in that year that The Japan Federation of Employer's Association (Nippon Keieisha Dantai Renmei) held an annual general meeting and adopted the resolution that Japanese industry replace the existing seniority-oriented management system with a system based on merit or ability.1 In 1973 Japan experienced the so-called "Oil Shock," which had a great impact on business. One can now look at the ~eriod before the oil shock as the stage of a "high growth economy" and the penod after the o I shock as a "low growth economy" We should keep in mind, however, that these changes have not lessened the need for the introduction of an ability-oriented personnel management system, but, in fact, have made it more imperative, even though we cannot deny that Japanese enterprises were forced to carry out radical changes when the period of high growth ended. In the following section we will first clarify the characteristics of Japanese personnel management in the period prior to 1965; that is, those of a seniority-b~sed personnel management system. We will then clarify the characteristics of an ability-based personnel management system in the periods of high and low growth. Lastly, we will turn our attention to "employee evaluation," which constitutes the core of the Japanese personnel management system and define the characteristics and problematic aspects of the system.