June 23, 2020

Increasing Use of Job-description Employment

Japan’s Labor Standards Law, enacted after the war, has asked companies to manage the working hours of workers. With the shift to job-description employment, people are starting to be asked to shed the preconceived idea that “the job is to go to the company”.

Seniority and lifelong employment are the Japanese systems that supported workers in stable employment and lives in the postwar period of rapid economic growth. But in recent years, growing numbers of companies, reacting to changes in the economic environment, computerization, declining working population, and other influences, have abolished seniority systems and adopted results-based methods. The seniority system has the advantage that the more years an employee has been working for a company, the more skills, expertise, and experience they have accumulated, and they have higher retention rates and more stable development. The downsides include rising personnel costs and difficulty in raising productivity.

With job-description type jobs, the abilities and skills required for the job are clearly stated, but the issue is how the employee should gain those skills and knowledge. Perhaps Japanese companies have not fully realized that necessity before now, which could be because they have benefited from the seniority system, or just because they didn’t spend money on employee education. Even if there was company training, it didn’t go beyond OJT, building up experience in the course of doing the job. Company capability development costs only amount to a tiny 0.1% of GDP. That is one twentieth the level of US companies. The table below compares it with other countries.

Sources: Ministry of Health, Labour and Welfare “Analysis of Labor Economy”
(Note) Share of company capability development costs within GDP

The snack giant Calbee took the coronavirus crisis as an opportunity to shift almost all headquarters staff to teleworking. The company’s ability to make the transition smoothly is largely due to its phased introduction of a results-based compensation system since 2009. Employees are free to choose where and when they work. Their pay is determined by the extent to which they attain a contract agreed with the company, based on specific numbers.

Fujitsu, the major general electronics company, will introduce a “job-description type” system, which clearly states job description and expected ability in advance, and then rates them on how well they fulfill that job. It will apply to around 15,000 employees of department manager or higher rank within FY2020. After that, it plans to roll out the system gradually to its general employees. Hitachi, Ltd. announced in May that it will fully introduce a job-description type system for around 31,000 employees in Japan. Hitachi judged that they must shed Japanese-style employment if they are to attract global personnel.

Job-description type systems are the norm in other countries. The test in future will be how companies achieve working methods that more flexibly mesh office work with telework.