When key decisions must be made, a team of three employees commonly canvasses the 60 or 80 people who will be most affected and gathers their advice before a team makes the decision. And many large Japanese companies care so much about their job-rotation systems that they assign their most respected director to oversee the personnel department, which is responsible for shifting employees from department to department.
Ieyoshi Yamada feels that few companies, even in Japan, achieve the unity of a good, small family business. He feels he has been right to avoid growth. Only a minority of people, in fact, care about business philosophies, he thinks. "Most people are working to assure their livelihood," he declares. Many accept a company's philosophy implicitly while failing to find any significant meaning in it. Japanese white-collar workers are notorious for remaining at their desks after 5:30 in the evening when they have finished their work, simply because their colleagues are still working and they don't want to be first to leave.
Japanese entrepreneurs, managers, and even personnel directors will readily admit that household-building doesn't necessarily produce a happy company, even when it does create a familylike company. Householdlike Japanese companies can have all the internal problems that families everywhere have.
If pressed, Japanese will even acknowledge that many companies sometimes lack the good features of families. Women are often treated as temporary employees and are asked to resign when times are hard. And even young men frequently leave smaller companies either because they dislike the household in which they find themselves or because their employers encourage them to resign. About 3.6 million of Japan's 25 million nongovernmental, nonagricultural employees -- 14% of the total -- left jobs in 1979, the last year for which complete statistics are available. Twenty-one percent of women and 11% of men were separated from an employer. Turnover is far lower than in the United States, where about 4% of employees left manufacturing jobs every month in 1979. But the turnover still indicates a significant amount of mobility in a nation where most employment relationships are supposed to last until retirement.
But the household ideal remains powerful in Japan. Changes in Japan's companies have occurred remarkably slowly, considering the tumult in the Japanese economy in the past 35 years. Important pressures perpetuate the householdlike business and thus encourage managers to continue the tactics of Theory Z. Compensation systems based on seniority and age encourage companies to limit hiring almost exclusively to new graduates who can be paid very modest wages to start (often less than $500 per month). Company unions and the independence of Japanese management from investor stockholders, which developed after World War II (even the largest companies had been owned by families before the war), have institutionalized the system of paying by age and seniority. Japanese know that unless they enter a rich company immediately after graduation and make it their home for life, they have little chance of ever receiving high wages.
An even more important force perpetuating the business household, however, is its success. The relative unity and longterm goals promoted by the household ideal seem perfectly suited to many modern manufacturing businesses, where hundreds of people must work together and where the results of many efforts to improve design, marketing, and quality often can't be readily measured for years.
The popularity of Theory Z and Book of Five Rings indicates a dramatic conversion of Americans to the view that they can learn from Japanese business households. And for U.S. corporate giants, at least, the new religion is likely to be healthy. It is hard to name a large U.S. company that is decisively overtaking the Japanese. But U.S. businesses are unlikely to beat the Japanese just by adopting Theory Z tactics. Japanese competitors have many other advantages, including the aid of Japan's remarkable government, access to the vast savings of the Japanese people at modest interest rates, and employees who have studied the military philosophy of Book of Five Rings, which -- while not the whole secret of Japanese success any more than Theory Z is -- certainly supports a strong work ethic.
For many smaller companies, however, the Japanese business model -- despite its useful lessons -- may not be superior at all. In small business sectors, whether high-technology portions of the electronics industry or such low-technology businesses as apparel, U.S. companies are holding their own. "I'm not very optimistic about the outlook for American big companies, says Hideichiro Nakamura, a Japanese economics professor who is trying to help organize a venture capital market in Japan. "But I'm optimistic about American small companies."
Like many Japanese, Nakamura admires the innovativeness of many American small companies. He notes that the hierarchical nature of a traditional Japanese business household isn't ideal for the rapidly changing fields that many smaller companies enter. Some young Japanese high-tech companies are innovative in their approach to handling people, he notes, moving toward greater informality and more respect for women, although he says employee turnover is just as low in most Japanese high-technology businesses as in older parts of the Japanese economy.
But a company has to choose what is right for its business and its people. America's smaller businesses don't have the standardized concern for the short-term bottom line that afflicts big U.S. companies, and some of them are already doing a good job of building a sense of family.
Ieyoshi Yamada suggests that defining the right philosophy is the most important step to building a business that is right for the people in it. He says it is common -- in Japan as well as in the United States -- for entrepreneurs to underestimate the difficulty of developing a philosophy that can keep a growing company both honest and familylike. The philosophy must inspire hundreds of people doing thousands of tasks. "In a big company, people have to have a vision for their section as well as a vision for the company as a whole," notes Yamada's eldest son Tomohiko, who is taking over the business from his father. The elder Yamada agrees. He says Western entrepreneurs can learn about vision from the Japanese. It will always be difficult to build an atmosphere where vision will thrive. "But in that," says the elder Yamada, "Japan is relatively good.
