Case study Exporting Japanese management

1
Case studyExporting Japanese management

• Week 10

2
Japanese companies in UK

• Why did Japanese companies come to UK?
• 1980s to establish presence before increasing
  protectionism of EU policy
• Mostly Auto manufacturers
• Nissan
• Honda
• Toyota
• Reasons
• partly because of the labour costs
• also because of the absence of a large volume
  indigenous manufacturers
• Key reason
• Conservative government of the time enforced a
  low wage policy

3
Obstacles to success of Japanese practices

• More likely
• Inappropriate institutions
• Unhelpful work traditions
• Tradition of adversary industrial relations
• Not so much differences in the technical and
  commercial competence of British managers or
• ability of British workers

4
Worker selection relations

• Nissan Sunderland
• Entered into a single union, no strike agreement
  with the Amalgamated Engineering Union (AEU)
• This reduces union power
• Used rugged recruitment program
• Jobs paid significantly lower rates than the
  industry as a whole
• Nissan argued it was in an area of high
  unemployment
• Implemented zero defect regime
• Increased injury and stress problems for
  employees
• On Nissan application form it was stressed that
  the jobs on offer at Nissan, are of a very
  physically demanding nature
• Workers working at maximum capacity does suggest
  that this will result in higher incidents of
  health problems

5
Worker selection relations

• Toyota employee indoctrination
• Refused to recruit employees who had previously
  worked in auto industry
• because traditional attitudes, allegiance to
  traditional job descriptions, and adversarial
  'demarcation mentalities' were perceived as being
  too expensive to eradicate and to remove with new
  habits of working

6
Worker selection relations

• Honda rejection of training departments
• There is no need for a training department,
  because it is the line managers responsibility to
  train their people ... No unions are recognised,
  and there is no company council

7
Conflict areas in practiceGreenfield Sites Survey

• Employees
• Should recruit local long term unemployed,
  practice showed 'poaching' skilled employees from
  local employers
• Training
• Claims of high levels of training but practice
  was training was of a too short nature, lacking
  any on-going formal process

8
Conflict areas in practiceGreenfield Sites Survey

• Pay benefits
• Pay levels for greenfield sites have been either
  equal or below national levels and
• Management felt that under single status, the
  gulf in differentials between them and shopfloor
  employees had been reduced by standardised
  benefits
• Promotion
• Major attraction of greenfield site is improved
  chances of promotion
• Employees actually felt there was less chance of
  promotion

9
Conflict areas in practiceGreenfield Sites Survey

• Unions
• Sites have single union agreements and
  corresponding high levels of membership but
• no-strike agreements led employees to question
  the validity of their trade unions
• Involvement
• Key element of Japanese management is high level
  of worker involvement
• Although employees valued being asked questions,
  they actually felt that the vast majority of
  their suggestions were ignored
• Management
• A lot of employees felt that the new companies
  were badly managed

10
UK adoption

• In auto industries Japanese techniques were
  implemented in 1980s to match Japanese
  productivity at
• Lucas Electrical
• Ford
• Rover

11
The experience

• Lucas
• Sought to use rugged management techniques to
  prevent union action
• Letter to unions
• a strong ultimatum to the workforce 'accept our
  survival plan or we will close the business'

12
The experience

• Lucas
• Introduced Just in Time stock management but had
  adverse effect when union action ocurred
• In 1986 a strike at Lucas Electrical rapidly led
  to 12,000 layoffs at Austin Rover ... Part of the
  reason for the speed and severity of the stoppage
  was the adoption of JIT deliveries

13
The experience

• Ford
• Core philosophy of Ford is limited worker roles
  and strong leadership
• In late 1970s tried to introduce quality circles
  
• Failed due to unrealistic timescale for
  implementation
• 1985 introduced
• Employee involvement and
• Participative management

14
The experience

• Ford
• Reduced number of job classifications from 550 to
  52 and introduced team working
• 1988 introduced flexible working practices
• Result
• National strike (Were Brits not Nips)
• Knock on effect
• Practices rejected in plants across Europe
  causing plant closures

15
The experience

• Rover
• In 1980s suffered from inflexible working
  systems and worker mistrust of management
• Subject to takeover
• Implementation of 'The transformation of
  union-management relations from one of perennial
  conflict to one of mutual accommodation'
• All the parties involved wanted the business to
  succeed
• Were adaptable to embracing change
• Initial feelings towards Japanese methods were
  mixed
• but all realised they had to be adopted to ensure
  survival

16
The experience

• Rover
• Success story but
• Was the acceptance of transformation because
  company would fold if system as was continued so
  nothing to lose from change?
• Change management under conditions of crisis.

17
Conclusions

• Is transferability of management techniques
  possible
• Can we only expect limited success?
• The debate is whether they should be used because
  the industrial relations, cultural, political and
  economic conditions are different in the UK
• Implementation frequently causes conflict with
  organised labour
• Is this because change is badly managed or
• Because it conflicts with traditional work
  practice or
• Organised labour is too strong/antipathy?
• Many firms in the past who have tried to emulate
  Japanese companies, have become concerned with
  one element, missing the totality of the Japanese
  system

18
Conclusions

• Quality and JIT production systems are two vital
  elements of the Japanese system but
• when imported into the West have had one initial
  burst of enthusiasm then gradual decline
• results in very short term benefits and adoption
• Successful adoption of any strategy which effects
  the workforce can only be achieved if employees
  are treated as strategic resources