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From Seniority to Performance Principle: The Evolution of Pay Practices in Japanese Firms since the 1990s

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  • Harald CONRAD

Abstract

After the burst of the bubble economy at the beginning of the 1990s, pay practices in Japanese companies have undergone significant changes that are characterised by a shift towards performance-based pay. The purpose of this article is to take account of these changes through an analysis of key research and survey results, to discuss the degree of success of the new systems and to examine some important interdependencies with changes in corporate governance and labour legislation. The success of the evolving systems in terms of increased efficiency and effectiveness remains contested, while many companies are still adjusting their understanding of performance and their assessment procedures so as to not negatively impact employees’ motivation and cooperative work practices. While the influence of corporate governance on pay systems remains limited, recent changes in labour legislation are likely to strengthen the reliance on performance-oriented pay in the future.

Suggested Citation

  • Harald CONRAD, 2010. "From Seniority to Performance Principle: The Evolution of Pay Practices in Japanese Firms since the 1990s," Social Science Japan Journal, University of Tokyo and Oxford University Press, vol. 13(1), pages 115-135.
    • Handle: RePEc:oup:sscijp:v:13:y:2010:i:1:p:115-135.
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    File URL: http://hdl.handle.net/10.1093/ssjj/jyp040
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    Cited by:

    1. Waldenberger Franz, 2013. "“Company heroes” versus “superstars”: executive pay in Japan in comparative perspective," Contemporary Japan, De Gruyter, vol. 25(2), pages 189-213, August.
    2. Gagliardi, Nicola & Grinza, Elena & Rycx, François, 2021. "Can You Teach an Old Dog New Tricks? New Evidence on the Impact of Tenure on Productivity," IZA Discussion Papers 14432, Institute of Labor Economics (IZA).
    3. Harald CONRADSasakawa Lecturer & Hendrik MEYER-OHLE, 2018. "Brokers and the Organization of Recruitment of ‘Global Talent’ by Japanese Firms—A Migration Perspective," Social Science Japan Journal, University of Tokyo and Oxford University Press, vol. 21(1), pages 67-88.
    4. Spinks Wendy A., 2011. "In the midst of transition: Salaryman senryū poems and the perception of workplace change," Contemporary Japan, De Gruyter, vol. 23(2), pages 187-212, January.

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