Introduction to Japanese Employment Practices

Japanese companies have traditionally prized lifetime employment and group harmony, which have shaped their approach to handling poor performance. These cultural values have led to a somewhat gradual and supportive process when dealing with underperforming employees compared to some Western countries.

Traditional Japanese Employment Practices

Historically, Japanese companies emphasized lifetime employment and loyalty. This meant that once an employee was hired, they were expected to stay with the company for life, fostering a sense of group harmony. As a result, direct dismissal of underperforming employees was less common, as companies aimed to support and rehabilitate staff.

Recent Changes and Shifts

In recent years, there has been a notable shift, especially in more competitive industries and among younger companies. This shift can be attributed to globalization, changing market dynamics, and the rise of non-regular employment such as part-time and contract work. These shifts have made it easier for Japanese companies to address underperformers.

Performance Evaluations: Companies increasingly use performance evaluations to identify underperforming employees and implement improvement plans. If an employee fails to show progress, a dismissal process can be initiated. This approach is a balance between supporting underperformers and maintaining workplace efficiency.

Corporate Restructuring: There is also a loophole in corporate restructuring that allows for easier dismissal of permanent employees. Some companies may transfer troublemakers to a subsidiary and then close the subsidiary due to poor performance, effectively letting go of underperforming staff.

Cultural Factors and Employment Contracts

The treatment of poor performers in Japanese companies can vary significantly based on their employment contract and the cultural expectations set by the company’s values.

Hakken Shain and Seishain

There are two major classifications for salaried employees in Japan:

Hakken Shain (Contract Employees): These employees have a contract for one year. If they are not a good fit, the contract is not renewed. This makes it easier for companies to address underperformance in a less permanent manner. Seishain (Salaried Employees): These are permanent employees. Firing a seishain employee is expensive and difficult. Typically, underperforming seishain employees are given less critical tasks, and hope is placed on them resigning voluntarily.

However, certain creative workarounds exist. For example, companies may relocate underperforming employees to a subsidiary and then close that subsidiary due to poor performance, leading to their dismissal.

Outcomes for Underperformers

Depending on the employment contract and the employee's behavior, the outcomes for underperformers can vary:

Seishain Employees: If hired traditionally in a traditional company, employees are expected to remain and give their all. Even if they underperform, the company may give them less critical tasks. If an underperformer causes significant harm or demonstrates disloyalty, they become more vulnerable to dismissal. Hakken Shain and Contract Employees: Contract employees are treated differently and may be given less critical tasks or have their contracts not renewed. Contract employees are generally not considered the same as seishain employees and are not as protected.

Peer Pressure and Company Loyalty: Historically, peer pressure and the soft power of group harmony were used to encourage underperforming employees to resign voluntarily. In recent years, the rise of power harassment has made bosses more reluctant to use this approach, forcing companies to explore other methods of addressing underperformance.

Ultimately, the treatment of underperformers in Japanese companies is a complex interplay of cultural values and legal frameworks, with a significant emphasis on rehabilitation and support.