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Manager working for Japanese Management

The Ultimate Guide to Japanese Management

From kaizen to nemawashi to non-verbal cues, there are a handful of terms and customs foreigners should equip themselves with before starting a business in Japan. Implementing effective Japanese management strategies in a foreign company will help aspiring entrepreneurs and founders grow and sustain their businesses. In this article, we will explore the basics of Japanese management, what we can learn from it, and how exactly it can help you.

What Are the Basics of Japanese Management?

Have you ever wondered what kind of principles drive Japanese management and how different it is from Western management? This section of the article will introduce you to some important philosophies in the context of Japanese business culture. Afterward, we will explore how it varies from the Western style of operating a business.

What are Kaizen & Nemawashi and Why Do They Matter in Japanese Management?

Kaizen is a Japanese term that explains the concept of continuous improvement, ultimately leading to change for the better. Initially introduced to the world by Toyota in the 1980s, this principle provides businesses with a transformation framework dedicated to improving every aspect of the company. While it may sound daunting to have to improve so frequently, this can be done in small steps. No matter how small or big the step is, it is still a step forward.

The next Japanese term is nemawashi. This word literally translates to “digging around the roots”. It was initially discovered by Japanese farmers who learned that if you dig up a tree and transplant it right away, the tree will still go into shock and most likely have no chance of living. To address this, the gardeners came up with a technique that involves digging around the roots and making sure that each root receives the necessary care in preparation for the transplant.

In the context of business, nemawashi means allowing staff to carefully lay the groundwork and get support for their ideas. In turn, they would feel much more comfortable sharing their ideas because they know that this system allows them to be supported instead of just getting outright rejected.

Last, but not least, is consensus decision-making. Under Japanese management, decisions are formulated by a group consensus, so it is hard to say who exactly made it. The process of making a decision is similar to building momentum with a consensus rather than a decision made by a single person at a single point in time. There are many other etiquettes you should know before doing management in Japan. We have gathered that for you in the article Japanese Business Etiquette.

How Does Japanese Management Differ From Western Management?

Japanese culture emphasizes seniority and the importance of having a hierarchy. This means that it is crucial to get the higher-ups’ approval for things that, in Western culture, are something that lower levels have power over. As mentioned earlier, the concept of nemawashi encourages grassroots levels to share their ideas, although these are subject to feedback and approval from those in higher positions.

On the other hand, Western management allows these staff to make their own decisions so long as they have facts and logical arguments to support them. Another point is that in Western management, voicing out your opinion and showing people how passionate you are about it will more often than not get your point across. In Japanese management, what matters more is persistence. One can share an idea, and to truly push through with it, one would have to be able to show the team all the different ways that they can persistently get their message through.

If you’re curious to learn more about Japanese business culture, we have a podcast just for you! Check out Japanese business culture with Rochelle Kopp!

What is the Japanese Management Approach to Decision-making?

Now that we’ve laid out some basic principles of Japanese management, it’s time to understand how these fold out in consensus-building. In this section, we will detail the Japanese approach to decision-making and some common misunderstandings that foreigners may face at some point.

Negotiation and Consensus-Building

negotiation under Japanese management

The process of decision-making in Japanese management is more a matter of negotiating concerns so that opposing voices gradually decrease. This is done until everybody feels that they’re all on board with a particular idea. While this can happen through communication, consensus-building under Japanese management relies heavily on non-verbal cues and the company’s unique culture.

There is a term in Japanese business culture called kuuki yomenai which means “cannot read the air.” Reading between the lines during decision-making processes is crucial, especially considering that not everybody will explicitly be voicing their concerns. In Japanese culture, it is not easy to share negative concerns, especially toward seniors. So, some individuals may end up being passive or prefer to slowly tune out. Once everybody feels that a decision has generally been agreed upon, there will be someone who formalizes the decision, concluding the process.

To help you prepare for your next meeting with Japanese individuals, we recommend reading our Guide to Best Japanese Business Phrases so you can leave a great impression on everybody!

Challenges in Decision-Making for Foreigners

It comes as no surprise for foreigners to experience culture shock in Japan, but that’s completely fine! We’re here to help you anticipate some challenges and how these can be overcome. Some cultural differences include different styles of confrontation, the role of hierarchies in decision-making, and business manners. As mentioned in the previous paragraphs, Japanese staff do not directly express their feelings when there is something they disagree with. This may be problematic for individuals who expect their colleagues to be completely open about their opinions.

Additionally, we also learned earlier that the decision-making process in Western management differs significantly from Japanese management. Such a difference could cause some conflict in collaboration and time management. Lastly, Japanese business manners can consist of the smallest gestures that may be overlooked by those who are used to Western Management. We have a podcast on Japanese business manners, so if you want to know more about these small gestures, we highly recommend listening to it!

One way some Japanese companies overcome this is by taking time outside of the workspace to have a casual gathering. This allows them to get to know one another as nakama which is Japanese for teammate, friend, or comrade. Such gatherings could be as simple as grabbing coffee together, having lunch, or dinner. However, lunch may be the ideal option as some individuals would like to spend dinnertime with their families after work. In doing so, teams will be able to get to know each other better and create a space where everyone is much more comfortable sharing their opinions.

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What are Common Human Resource (HR) Practices Under Japanese Management?

human resource department with employee

For some people, employment stability and security are vital when searching for jobs. Thus, Japanese management introduced certain HR practices to cater to this. In this section, we will learn about three common practices under Japanese management. Watch out for some practices that you might want to implement in your own company!

If you are looking for more tips on starting a business in Japan, we have an article just for you! Our guide on How to Start a Company in Japan will tell you all about market opportunities, funding, recruitment, and more!

Lifetime Employment 終身雇用 (shūshin koyō) is the practice of companies hiring individuals with the promise of keeping them until their retirement even in the event of economic crises. This practice is implemented mainly to provide job security and stability to workers. For individuals who are looking for this kind of stability and do not see themselves shifting industries, this adds to their loyalty to the company. Additionally, workers may also prefer lifetime employment as it provides them with a sense of belonging in the community they are working for.

A seniority-based wage system 年功序列 (nenkō joretsu) implies that an employee’s age and number of years in service are the two determining factors of their wage. Additionally, promotions are based on how close an employee is to their retirement which, in Japan, is at 65 years old. Some may argue that compensation must be based on performance and skills. However, this practice aims to keep an employee’s loyalty by guaranteeing them increased benefits in the long term. We have also discussed earlier the importance of hierarchy and seniority in Japan, so the practice of nenkō joretsu aligns with the principle as well. What do you think about this?

Omikoshi 神輿 management exhibits the important role of an intermediary party between the higher-ups and those in the lower positions. The term omikoshi describes a shrine that is carried by men; serving as a means of transportation for a deity toward a new shrine location. This is usually done during festivals in which the shrine is walked through neighborhoods by local volunteers. Taking this concept into the business scene, the main goal of omikoshi management is to have a middle-level party to relay the lower levels and higher levels’ insights and concerns to ultimately lead the entire company towards achieving its goals.

Human resources in Japan is one of the more complicated topics within Japanese management. We’ve prepared 5 HR tips for entrepreneurs who just started their company in Japan.

HR in Japan: Top 5 Tips

How Can Japanese Management Help You Grow Your Business?

If you’re curious to see how the previously mentioned principles can contribute to the growth of your business, this section is just for you. The following paragraphs are brief stories from companies that have implemented certain principles of Japanese management into their operations. Upon reading this, we encourage you to conceptualize ways to implement these principles in your unique ways as well!

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Success Stories From Companies Adopting Japanese Management

GCash is a digital wallet for Philippine residents. The app allows its users to send and receive money, pay their bills, make donations, and shop online through convenient digital payments. GCash was not always able to serve so many functions. Its CEO and founder Martha Sazon believes that so long as there are Filipinos who struggle with accessible financial services, GCash will continue to make innovations to address this problem. This parallels the concept of kaizen as the company’s improvements are dedicated to making changes for the betterment, convenience, and accessibility of financial transactions in the Philippines.

Startups are also great examples of nemawashi as relatively smaller teams allow more intimate discussions. For example, Kotozna is a startup dedicated to addressing the issue of language barriers. With just over 20 members, Kotozna was established in 2016 in Japan. Just six years later, in 2022, Kotozna Singapore was born. A close-knit team of 27 members allows Kotozna’s team to closely observe and attend to each others’ needs, performance, and opinions. This kind of close collaboration will let a team learn more about what kind of management strategy and chain of command works best for everybody. Ultimately, business operations will run much smoother after seeing to it that all members of the team are on the same page.

In an article by the Harvard Business Review, readers learn about the story of Swisscom which is Switzerland’s leading mobile telephony company. The story explains how the company used a unique strategy to build consensus among a team. They called this the “walk the line” technique which involved sticking pieces of tape on the floor. Each piece of tape represented a certain stand or position on an issue. Then, the individuals are asked to stand by the piece of tape that holds the position they agree with. This created an immersive experience that allowed everybody to have more ‘robust’ discussions about the issue at hand.

What Does the Future of Japanese Management Look Like?

The previous paragraphs focused a lot on what Japanese management looks like right now. However, it would also be helpful to know and anticipate what it will look like in the future. Doing so as early as possible will give the individuals the upper hand in adapting to the evolution of business dynamics. Additionally, managers can understand how to attract, retain, and manage their team in anticipation of the changes that the future holds. The Japan Association of Corporate Executives released a brief paper discussing what innovations and reforms can be made to Japanese management. Some important aspects include loyalty, trust, and a global mindset.

One key point from the paper discusses long-term management. This aspect calls on managers to consider the long-term value and contributions that their personnel can make, and how they can maximize the team’s potential. By acknowledging each individual’s strengths and enabling them to be open about their contributions, employees are also likely to show heightened loyalty to a company that supports their growth.

A second key point is the importance of building a relationship of trust between executives and employees. As mentioned earlier in the paragraph about omikoshi management, there must still be an intermediary between higher and lower levels. The paper by the Japan Association of Corporate Executives suggests that a closer and stronger relationship of trust between the two levels would aid strongly in optimizing the utilization of personnel.

Lastly, a critical point for the future of Japanese management is fostering a global mindset in executives. With the continuous rise of globalization, companies and businesses need to promote a diverse work environment and open up to perspectives coming from various cultural backgrounds. The paper proposes that fostering a global mindset in executives will enable corporations to attract not only outstanding foreign employees but consumers as well.

Final Thoughts

To summarize this article, the Japanese management style is a unique approach with an emphasis on principles that are rooted deeply in Japanese culture. In one of the previous parts, we provided three stories of companies that integrated certain principles into their operations and how they led to success. We hope that these stories have inspired you to try implementing Japanese management strategies in your own business as well. In short, we were able to tackle kaizen (continuous improvement), nemawashi (digging around the roots), and consensus-building which all contribute to the betterment of a company’s employees and overall growth. Which one was your favorite?

Exploring ventures with Japanese companies can be difficult, especially if you’re foreign and not familiar with Japanese management style and culture. Scaling Your Company can help you:

  • Grow as a leader in Japan
  • Help you locate issues in management, leadership, hiring, company strategy, or direction
  • Create a business that you want but also one that people want to work for

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