People as Resources

Sony has long been a leader in human resources management in Japan. The company has adopted such American concepts as the five day, 40 hour work week, even though Japanese law still sanctions a maximum of 48 hours and the average in Japanese manufacturing remains 43 hours per week. Moreover, Sony was one of the first Japanese firms to close its factories for one week every summer to allow all its employees to be off work at the same time.

In addition, the Japanese system enforces a different view of recruits. Morita urges managers to see recruits as rough stones and the managerial job as the task of building a strong and sturdy wall out of these rough stones. The Japanese ideal is to shape and smooth managerial recruits so that they become a cohesive part of the company.

Japanese companies, at least the large ones, also have a humane attitude toward dealing with employees in declining. Most companies offer retraining and most workers eagerly accept it. At Sony, workers are retrained when their particular jobs become obsolete.

Clearly, Akio Morita’s human resource policies accommodate Sony’s overall strategy. By focusing on the shared fate of management and employees, Sony develops among its workers a sense of commitment to the overall goals of the firm. Partly because of this employee commitment, Sony has been able to stay competitive in terms of wages and benefits and to motivate highly competent people to continue to innovate.

By focusing on people as resources rather than as costs, companies like Sony are writing the book on future management theory and practice.

A Model Evaluation Program:

At Prudential Property & Casualty Insurance, Priscilla Smith, vice president of human resources, initiated a human resources program that, among other things, invites employees to learn more about the insurance business to add to the company. To ensure that performance expectations are clear, new hires receive a blank copy of the evaluation form that will be completed the following year. An employee who fails to measure up goes through a performance improvement process that begins with his or her own development of an action plan. If this does not work, then the employee takes a day off to decide to resign or commit to change. So far, more than 60 percent of the employees who have gone through the performance improvement process have shown improvement. Supervisors are thrilled with it, Smith explained, and associates are more aware of their own performance. In addition, employees are recognized for outstanding performance with compensation awards, for which 15 percent of management staff already qualifies regularly. Turnover at Prudential dropped three percent between 1991 and 1992 and in the first six months alone, Smith reported $97,000 in savings from process improvements in areas including communication, training, and benefits – three times the company’s year end goal of $30,000. This success has attracted the attention of companies such as AT&T who are currently looking toward Prudential as a model or benchmark.

Informal Appraisals:

We will use the term informal performance appraisal to mean the continual process of feeding back to employees, information about how well they are doing their work for the organization. Informal appraisal can be conducted on a day-to-day basis. The manager spontaneously mentions that a particular piece of work was performed well or poorly, or the employee stops by the manager’s office to find out how a particular piece of work was received. Because of the close connection between the behavior and the feedback on it, informal appraisal is an excellent way to encourage desirable performance and discourage undesirable performance before it becomes ingrained. An organization’s employees must perceive informal appraisal not merely as a casual occurrence but as an important activity, an integral part of the organization’s culture.