TRADITIONAL JAPANESE COMPENSATION SYSTEM

TO NEW COMPENSATION SYSTEM TRENDS

Recommendations

1. Performance based pay : Hiring of new employees or mid-level employees and keeping older
employees, on the basis of their skills, experience, and performance.

2. Labor mobility could lead to higher wage differentials. Hire the labor force on short-term basis
to adjust the labor force according to the current trends in the business environment. With the
help of contract based employment, Free-lance employment and introduction of outsourcing,
the wage system could also be diversified

3. Women in the job place: In a traditional Japanese employment system women do not get the
equal opportunity in economic and others except that they hold a special place in the privacy of
home. Giving opportunity to the women in the work environment will also help to diversify the
company compensation system. It will also help to meet the low population growth rate in
Japan and women can serve as a new pool of job applicants for the employers to hire.

4. In a traditional Japanese system the recruiting is based on the relationship with the colleges and
universities, employees are recruited from the colleges and universities and then given in-
house, on the job training throughout in employee’s career with the company. Recruiting the
employees from other means such as recruiting agencies, mid-career hiring, lateral hire etc,
could also help in diversifying the compensation system