MOHAMMAH ALI JINNAH UNIVERSITY.

AMERICAN SYSTEM VERSES JAPANESE SYSTEM
MANAGEMENT PROJECT
[Type the author name]

2009

SUMITTED BY: SANIA SYED

SUMITTED TO : MISS ANITA LAILA

SUMMITED TO MISS ANITA

THE MANAGEMENT PROJECT JAPANESE WORKING SYSTEM VERSES AMERICANS WORKING SYSTEM.

Management project Page 2

SUMMITED TO MISS ANITA

1 2 3 4 5 6 7 Executive summary Introduction to Japanese management Introduction to American management comparisons conclusion 4 7 8 9 17 18

Management project Page 3

SUMMITED TO MISS ANITA

ACKNOWLEDGEMENT:

In the name of Allah who is most beneficial and most merciful. I am most gracious to Allah the almighty who bestowed his blessings upon us while we were doing this project, and thankful to Madam Anita Laila who allowed us to complete this project and thanks to all my group members who helped me out to complete this project.

Management project Page 4

SUMMITED TO MISS ANITA

EXCUTIVE SUMMARY

T

he deluge of articles about Japanese Management seems endless. So we have decided to offer our own

last comment on the Japanese Miracle. This article requires the courage to laugh and learn (not necessarily in that order). So if you don't have a sense of humor or aren't in the mood to chuckle at (a) yourself, (b) the Japanese, or (c), the U.S., please consider this “THE END”. It's a small world now, full of "won minute managers."The purpose of this discussion is to properly set the stage for thinking about Japanese managers and distill some horse sense out of the huge quagmire of self-serving distortions and whimsical fantasies Our model demonstrated that the managerial styles in the U.S. and Japan are opposite to each other in all six managerial dimensions. It also suggests that the differential application of managerial dimensions can be offered as an explanation for differential unit effectiveness. The empirical results of our model are consistent with earlier theories and findings on the comparison of the U.S. and Japanese management. The American management pattern is mostly characterized by supervisory style stressing more Theory X type, task-oriented, and transactional leadership methods. In their decision making, American managers emphasize concrete results rather than the process. Additionally, they make decisions in a less participative fashion than do Japanese. Individual responsibility and top-down decision making appear to be common features of the American system. Furthermore, the U.S. management favors a control mechanism based on close supervision and an explicit formal control pattern. On the other hand, one of the salient characteristics of Japanese management is that communication in Japanese organizations appears to be open and mostly face-to-face thereby minimizing barriers to effective information flow. Moreover, interdepartmental interactions are intensive in Japanese organizations. Japanese manager are attentive to interdepartmental dependency and cooperation. Furthermore, paternalistic orientation in Japan is well-instituted as managers are concerned for the employees' non-work matters. Japanese managers also view their units as more effective in comparison to American managers because probably open communication and ringi system in Japan, in particular, improve operations. Any comparative management analysis like ours usually leads to the question of how to transfer effective models and techniques from one environment to another. Indeed, the Japanese successes in Western markets have stimulated Western companies to examine and adopt Japanese managerial practices. However, a debate on the transferability of the Japanese management style to the Western countries still continues. Some experts claim that Japanese techniques cannot be copied because they depend on Japanese culture, while others believe that these techniques can be transferred and those proponents even give some successful examples (Johnson 1988). Although management is always culture-bound to some extent, certain management practices are less culture-bound than others. Thus, some techniques might be nurtured in different environments as long as they are applied properly. This argument suggests that culture-bound techniques are not transferable unless a conductive cultural environment is created. For example, the Japanese ringi system and paternalistic orientation would probably not work at a typical U.S. company where values of individualism and privacy prevail. On the other hand, some management practices as less culture-bound can be transplanted in another country. Practical examples of such successful transplantations are quality circles and just-in-time management adopted from
Management project Page 5

SUMMITED TO MISS ANITA

Japan by American and European companies. These techniques characterize the decision making and probably interdepartmental relations dimensions respectively in our model. Our findings suggest that to modify the American managerial system, not transplantations but major transformations should be made in the areas of supervisory/leadership style, decision making, and control mechanism. Indeed, all three components are interrelated but for the purpose of better illustration, we will elaborate separately on each. Supervisory/leadership style needs to be transformed from an authoritarian approach to a democratic one. Failure of American corporations to reflect the overwhelming democratic values in American society is a paradox. Some frustrations among American employees at workplace probably stem from this paradox. Hence, managers are highly recommended to adopt transformational leadership virtues. In decision making, American managers need to consider both decision results and process. Effective decisions will more likely be made in a process that is, if not participative at least consultative. Such a process requires that managers should not "... decide until others who will be affected have had sufficient time to offer their views, feel they have been fairly heard, and are willing to support the decision even though they may not feel it's the best one. A movement toward employee involvement and participation in management decision making will foster employee commitment and morale as well as unit performance. In the control process, it is important to diagnose the various causes of unacceptable deviations and then to take the corrective action. U.S. managers should allow their subordinates to identify the causes of the problem and apply corrective actions themselves because those people carry out the tasks. When employees suspect or are aware that something is wrong with their performance, they should be able to take necessary steps to search for and to fix the problem. We do not think an implicit control mechanism is suitable for American employees who request clearly defined goals and standards. Hence, an effective control technique for American organizations might entail incorporation of employee involvement with explicit control. This is why probably Management by Objectives and goal-setting techniques have reached some success in the U.S. In all three managerial processes described above, the key to the success seems to be the management style encouraging employee involvement. Two major means of achieving employee involvement are open communication and paternalistic orientation. Open communication unlike a paternalistic approach is less culture-bound and can be easily employed by the U.S. organizations. Even a paternalistic approach, if modified to accommodate American cultural values, can be used by American managers to enhance employee commitment and involvement. Paternalism in the American sense implies more concern for employees' welfare and satisfaction. While Western companies are adopting some Japanese managerial techniques, Japanese organizations are undergoing some changes because of the development of high technologies and internationalization. Japanese assert that "as they gradually redesigned the employment and reward system in their firms, Japanese managers are trying to maintain the advantages of group harmony, employee loyalty, and cooperation while eliminating the burdens of employment hypertrophy and enhancing flexibility by shifting more of the

Management project Page 6

SUMMITED TO MISS ANITA

risk to a greater proportion of workers". Exposure of Japanese corporations to Western culture and managerial practices will entail several changes in their management approaches. Such changes will probably manifest themselves in the areas of supervisory style, decision making, and paternalistic orientation. Specific examples of these changes may include introduction of individualism and merit system and loosening life-time employment. Such exchanges of managerial practices between nations do not mean that differences in management styles will disappear one day. As long as we have different cultures, management systems as a by-product of culture will manifest unique characteristics in given country. Therefore, we need further studies to examine similarities and differences in managerial styles across nations. Nath (1988) cites five convincing reasons for studying comparative management: living in an interdependent world, its universal nature, sharpening our understanding, widening the knowledge base, and appreciating our own culture and environment. However, we need sound models and methodologies to distinguish characteristics of different systems and displaying similarities and differences among them.

Management project Page 7

SUMMITED TO MISS ANITA

INTR DUCTION TO THE MANAGEMENTS OF BOTH THE NATIONS Japanese Management
Each and every one of us have different types of approach over management. Many follow different strategies in their business and their policies. I would like to give you a brief content about the japanese business. I will be talking about the style of japanese management, how they organise plans, how they make decisions and more. Briefly, the core of what is known as the Japanese style of management comes from an emphasis in Japanese society on building consensus in group decision making. In Japanese business (as in Japanese society), the group comes before the individual. Managers are, therefore, expected not to command employees but to lead them by consensus. In general, Japanese managers encourage their employees to make suggestions for improvement and to participate in an organization’s decision-making process—much more than in most American organizations. They take time to create buying, which then allows them to implement decisions much faster after a decision is made. They also tend to favor the development of long term relationships and strategies over short-term gain. In his book, Theory Z: How American Business Can Meet the Japanese Management Challenge , William Ouchi noted the following characteristics of Japanese organizations: lifetime employments (this has become difficult for many Japanese companies in recent years), slow employee evaluation and promotion, no specialized career paths, implicit control mechanisms, collective decision making, collective responsibility, and holistic concern for the employee as a person.

Management project Page 8

SUMMITED TO MISS ANITA

E

AMERICAN MANAGEMENT
very country is different from other. There management, food, way of living and standards are all different. In some country government is very influencing while in other they are not much bother. Such two different countries America and Japan

American are performances oriented unlike Japanese who are perfectionist. This is one of the major differences in both. Americans consider this following seven components very important (super ordinate goals, strategy, structure, administrative staff (the concern for having the right kind of people), skills (training and developing the people), and style (the manner in which management handles subordinates, peers, and superiors) are followed by Americans very strongly. Americans are very much in specialization in contrast to Japan.

American managers are least bother to know about the personal life of there employees where as much bother about the working environment of the offices. They are strictly professional. Plus in America it does not matter where one is working from, home or offices. As long they are doing there work in time. In most cases they are allowed to work at home (if there employer allows them to do so).They are no fixed working hours in most American firms. American management does not involve much feed back from the employee when taking decision only the top manager makes the decssion. American are world wide leaders but American firms are least consider about the global warming, pollution and green house effect. There firms are profit making machines

Management project Page 9

SUMMITED TO MISS ANITA

1. Market First

- Products are made for the U.S. market, not the Japanese market. Usually a product is made for the factory, that is, it is easiest for the factory to make. While this happens in Japan, it is a sure way to loose the competitive edge. - From the beginning, the Japanese are export minded. - They learn from their markets and their customer, and how the market is changing. - As Romans do in Rome—localize products. An example is Ford built a single car for world export, the so called world car. It didn’t work. McDonald’s and Coke, however, taste slightly different in Japan than in the U.S. They succeeded; with localization comes a loss of your identity. It is also necessary to learn how to manage people in different cultures. He suggests that the Japanese are struggling with how to manage white collar, information workers.

2. Long Term Commitment - Relationships are critical to good business. Trust is more important than contracts, receipts and law courts. Trust takes time and patience, but so does legal wrangling. - Learning—information and know-how accumulation. - Stability and Flexibility especially with customers, suppliers, employees and investors. In down times Japanese companies avoid layoffs and contract terminations. They use this time to send employees out to talk to customers, train or re-train them, clean the physical plant, and so on. The government supplies funds for training during slow economic times. - The Japanese spend much more time up front with a potential customer or supplier before making a commitment unlike Americans.

3. Training and Education - On the Job Training is an American ideology. - Communication Plaza Concept—while this is fading in Japan, employees meet with the executive informally over lunch or dinner to listen to each other.

4. Get-in-Touch, Learning From Facts - Mix with employees and customers. Japanese engineers, e.g., go to the factories, and don’t wear distinguishing jackets or hard-hats. An insight in Japanese culture…Japanese neighborhoods are less stratified in terms of economic class. CEOs may live next door to engineers and factory workers where as most Americans would not consider livening next to a subordinate. - Learn from competitors—Americans are creative, but would be smart to do more
Management project Page 10

SUMMITED TO MISS ANITA

copying. Japanese are world class at copying and improving upon an idea, but would be smart to develop their creativity.

5. Effort Evaluation - Process versus Results—this seems to be the key difference between Americans and Japanese. Americans are more results oriented, Japans focus on process improvements. Once they learn how to do something, they work on small improvements—they evaluate effort not results. Because Americans are process averse, they depend on manuals to tell what the results should be. - Blue collar workers like the rewards in a process environment, i.e., for their effort not the result, especially in a service environment. - The down side of the process focus is to squelch creativity. Overall, the two cultures should learn from each other, and become more like each other. Neither completely process nor completely results focused.

6. Customer First and Shareholder Last - The priority order of customers and suppliers is different for U.S. and Japanese businesses: Japan

1. Customer 2. Employee 3. Supplier 4. Community 5. Country 6. Shareholder
America 1. Shareholder 2. Customer 3. Employee* * but the employee is told the customer is number 1 - American entrepreneurs follow more closely the Japanese ranking. - The Japanese firm is organized for the employee. It is a more human orientation. Here
Management project Page 11

SUMMITED TO MISS ANITA

we build an organization, and find employees to fill it. [I heard from another source, the right hand person to the CEO is the CFO in American firms. In Japanese firms the right hand person is the VP of Human Resources—ed.] 7. Team Work - The Japanese and Americans see two different meanings behind these words. In Japan team work means to help others, here it means functional maximization, that is to improve results. - This leads to a difference in the roles on the team. In Japan the team leader is always asking team members to help more, here the team leader is responsible for results. 8. Flexibility - General management transfers to any department, it is fuzzy and easy to adopt. Americans tend to specialize, which leads to rigidity and difficulty in changing. - Japanese take the long range view, and ask How long can you wait? This can also lead to a lack of decisiveness. 9. Quality First, Cost Last - This is the proper ranking of quality in the organization: 1. Quality 2. Quality 3. Quality 4. Cost - Profit is the result of the pursuit of quality—as quality improves, costs go down. - Quality includes products, services, machines, layout, policy, planning and organization. 10. Learn From the Best - Always look at someone better. The problem is when you get to the top, you have to become more creative—this is Japan’s challenge. - Short comings of Japans practices are: - Lack of Decisiveness: they are not transparent. Decisions sometimes take too long and they loose their timing. - Individual Ability Ignored: miss creative opportunities. - Miss Strategic Opportunities: too much delay and time.

Comparison between the two countries

Management project Page 12

SUMMITED TO MISS ANITA

This study of American and Japanese management styles has identified the salient features of both systems. To understand and learn from different management systems, its model offers an effective tool for comparative studies; but for further research advances the present model has to be expanded or alternative models have to be developed. Comparative management has received a lot of attention over the last two decades as global business has increased tremendously. Critics have claimed that different management styles account for the level of international competitiveness of firms. Because of the success of Japanese companies in world markets, researchers have paid a special attention to the Japanese management style . As a result, many scholars compared the Japanese management system with the American and European system Seven major characteristics of Japanese organizations: lifetime employment, slow evaluation and promotion of employees, non-specialized career paths, implicit control mechanism, collective decision making, collective responsibility, and holistic concern (building a complete relationship between employer and employee, including concerning with employee's non-work, personal and family, matters). "seven S" model developed by the McKinsey Co., including the following seven components: superordinate goals, strategy, structure, systems (administrative), staff (the concern for having the right kind of people), skills (training and developing the people), and style (the manner in which management handles subordinates, peers, and superiors) are followed by americans. Japanese companies are more effective because of their integration of these seven components and their concern for staff, skills, and, most importantly, style. They call these factors "soft S's" which have to do with human element. japenes stress the importance of managing people as key resources and the importance of superordinate goals, sense of spirit, or company philosophy. Hatvany and Pucik (1981) offer a model of Japanese mannagement in which they define three interrelated strategies: (a) to develop an internal labor market securing a labor force of desired quality and to induce the employees to remain in the firm; (b) to articulate company philosophy based on concern for employee needs and cooperation and teamwork; and (c) to engage in intensive socialization. The authors assert that these general strategies are translated into specific management techniques including job rotation and slow promotion; evaluation of attributes and behavior; emphasis on work groups; open communication; consultative decision making; and concern for employee. Although they do not contrast American and Japanese managerial characteristics explicitly, they organizational theories developed in the West in their analysis of Japanese attributes. The authors also argue that the Japanese techniques can be adapted by firms in other countries. They claim that Japanese managers handle more information and learn more about their organizations. "This greater commitment to an organizational learning perspective may be an important source of differences in the strategy-formulating behavior of Japanese and American executives"
Management project Page 13

SUMMITED TO MISS ANITA

Model for Management Style and Unit Effectiveness The conceptual model of management style and unit effectiveness shown in Figure 1 consists of six principal dimensions by which a comparison of management systems can be made. These six dimensions are as follows: (1) supervision style: managerial behavior related to the subordinate's expectations that his effort would result in desired rewards, (2) decision-making: the process in which decisions are made within the unit and the extent to which employees contribute to or participate to managerial decisions,

(3) communication: information flow within organizations and departments, and barriers to information flow, (4) control: mechanism used to check operations conducted and results achieved by the employees meeting the standards, (5) interdepartmental relationships: interactions and deals with other units, and (6) paternalistic orientation: supervisory concern for employees' non-work related matters. We elaborate on each of these dimensions and relate them to organization and management theory

Management project Page 14

SUMMITED TO MISS ANITA

1. Supervisory style refers to the type of interactions between supervisors and their subordinates. During the management process, supervisors usually act different ways and use different styles to relate to their subordinates. These different managerial and leadership styles are well documented in the early and contemporary management literature. 2. Decision making refers to different approaches to across organizations and countries. Major differences can be observed in the areas as follows: long-range vs. short-range orientations , emphasizing on results vs. processes, and using authoritarian vs. democratic approaches (Likert 1961). The literature on the Japanese decision making has consistently underlined the "ringi" system, a consensus-oriented decision making process. 3. Communication pattern refers to the functions of organizational communication, including providing informational input to decisions; establishing tasks, duties, roles, responsibilities, and authority; achieving cooperation, and guiding action toward goals; instructing, developing, and changing; and providing feedback. Communication flow and barriers to effective communication flow in an organization define a key component of management reports extensive face-to-face communication in Japanese companies. 4. Control mechanism refers to comparison of standards with outcomes. "Communication theory provides a basis for understanding how organizational effectiveness is obtained. Effectiveness appears to be a product of control processes that produce uniformity and coordinate effort behind goals" . Although control is needed in organizations, strict control leads to structural patterns such as centralization and a tall hierarchy. In comparing American and Japanese management practices, Ouchi (1981) distinguishes between explicit and implicit control. American management sets specific, measurable performance targets, whereas Japanese managers rely on values embodied in a philosophy of management, governing organizational and individual behavior to accomplish objectives. 5. Interdepartmental relations describe the degree of interaction among departments within an organization. Accomplishing departmental objectives often requires various forms of inputs from others departments. "For example, a department depends on other departments for resources, work, or information, and the other departments depend upon that department for resources, work, or information. One's understanding of that department is enriched from the knowledge of its interactions with other departments" Of course, the degree of interaction including necessary and voluntary types varies from one situation to another. 6. Paternalistic orientation means managers' concern with personal and family life of employees and providing social support for them. One of the distinguishing characteristics of Japanese management is its paternalistic nature. Ouchi (1981) calls it "wholistic concern for employees" as defined above. In other words, paternalistic orientation requires managers to assume social support roles in addition to their work-related roles for their employees. This particular dimension varies across nations; hence, it provides a useful measure to make crosscultural comparisons.

Management project Page 15

SUMMITED TO MISS ANITA

The explanations given above show why all six dimensions are essential components of a management system. The model presented in this paper uses these dimensions for a comparative analysis. The final component of the model, unit effectiveness is determined by management style as it represents the integrated functioning of the six dimensions. Unlike previous studies on organizational effectiveness, our model is concerned with departmental effectiveness for two simple reasons. First, the cumulative effect of individual departmental performance most likely influence overall organizational effectiveness. Second, from a practical point of view, each manager would know the operations of his or her department better than those of the total organization.

Hypotheses Based on the above discussion and our conceptual model, three hypotheses are constructed as follows: H1: Management styles as defined by six managerial dimensions of supervisory style, decision making, communication pattern, managerial control, interdepartmental relations, and paternalistic orientation differ significantly between the U.S. and Japan. H2: The U.S. and Japanese managers consider each managerial dimension differently and emphasize different sets of managerial dimensions. H3: American managerial perception of their unit effectiveness differs significantly from those of Japanese managers.

Management project Page 16

SUMMITED TO MISS ANITA

Conclusion

T

his paper reviews the literature comparing U.S. and Japanese management systems and identifies the underlying theoretical dimensions in organization and management literature for a conceptual model for comparative analysis. Then it provides a model of management styles and unit effectiveness. The model consists of six managerial dimensions, namely, supervisory style, decision making, communication pattern, control mechanism, interdepartmental relations, and paternalistic orientation. It also proposes that overall management style determines organizational or unit effectiveness. The results of an empirical test of the model show that American management style is different from the Japanese. The variability between two countries lies among the all six managerial dimensions as well. While American managers emphasize supervisory style, decision making, and control mechanism, the Japanese are more concerned with communication process, interdepartmental relations, and paternalistic approach. Our study of American and Japanese management styles has identified the salient features of both systems, our conceptual model offers an effective tool for comparative studies, but advances in the present model or development of alternative models is needed for further research. We have taken all the points like the difference in there working environment, style and etc.

Management project Page 17

SUMMITED TO MISS ANITA

Appendix Supervisory Style: Amount of discretion given to subordinates Degree of delegation of authority to employees Soliciting for worker inputs Freedom of employees to schedule their own work Democratic supervision Only supervisor handling work problems Decisions and work problems delayed in supervisor's absence Supervisory back-up for his/her employees Supervisor's sacrifice for his/her employees Amount of direction given from top Close supervision Decision Making: Soliciting for workers' inputs Tackling unusual work problems Trying innovative methods and products Number of suggestions from the unit members Wasting time and effort by incorrect estimates Accepting unpopular projects Initiating improvements Decision delegation to the lowest level Consensus decision making Employee participation in decision making Amount of supervisory direction Individual decision making Employee freedom to select their own course of actions Communication Pattern: Supervisory awareness of unit performance meeting standards Free flow of information Supervisors awareness of things happening within unit Complains reaching top management Employee unawareness of changes in policies and directives Communication are blocked Control Mechanism: Managers being on top everything Emphasizing on production as a goal Freedom of workers to schedule their own activities Democratic supervision Relying the unit without checking Followingups and checking in goal realization Close supervision Interdepartmental Relations: Providing assistance to other units for favors Making trades and deals with other units Bargaining with other units Frictions with other units Coordination with other units Criticized by other units for being uncooperative Getting into conflict with the other unit.

Mean Responses and Standard Deviations of the USA and Japanese Managers' Views on Managerial Dimensions Dimensions USA Japan Mean (S.D.) (Mean S.D.) 1. Supervision style 5.823 (0.661) 4.603 (0.684) 2. Decision making 5.628 (0.703) 4.948 (0.500) 3. Communication pattern 4.824 (0.843) 7.380 (1.330) 4. Interdepartmental relations 4.500 (1.000) 6.035 (0.969) 5. Paternalistic orientation 4.080 (1.640) 5.400 (1.050) 6. Control mechanism 5.533 (0.677) 4.961 (0.687) The results of the t-test with t = 3.03 at p < 0.0033 as shown in Table 4 confirms the hypothesized relationship in H3. Table 4 also indicates that Japanese managers consider their organizational units more effective than
Management project Page 18

SUMMITED TO MISS ANITA

American managers do. A greater standard deviation of the American responses imply that their perceptions of unit effectiveness vary more than those of Japanese managers. Table 4. Comparison of American and Japanese Unit Effectiveness USA Japan Mean S.D. Mean S.D. t p Unit effectiveness 6.09 2.06 6.92 1.38 3.03 0.033

Management project Page 19

SUMMITED TO MISS ANITA

THE END

Management project Page 20