| Anyone living on this planet knows that the Japanese | | | | being tough, but fair. Employees who are just "holding |
| system -- if not broken -- is in serious need of repair. | | | | on" are not tolerated.Many of managers who are |
| The nenkojoretsu system (the literal translation is | | | | critical of our government entitlement programs are |
| "years-merit-order") channels millions of workers in an | | | | equally guilty of tolerating them within their own |
| orderly, predictable way through the corporate | | | | companies. Ask yourself these questions:- How many |
| system.Examples of the nenkojoretsu system:- | | | | of my employees who received raises this year |
| Longevity determines a worker's rank in the | | | | actually deserved them?- How many of the |
| organization.- Competence is equated with age.- | | | | employees who are currently on my payroll have I |
| Experience counts more than expertise.- Each spring, | | | | given up on and should replace?- How many of my |
| and with no explanation, workers receive slips of | | | | current managers earned their promotion as a result of |
| paper advising them of nearly identical raises.- During | | | | longevity rather than merit?- How many of my current |
| the first 15 years with their respective company, | | | | managers have plateaued?Bloated payrolls will |
| workers receive promotions regardless of their ability.- | | | | eventually lead to financial disaster in any industry. |
| The best indication of high performance: Working long | | | | Performance standards of just five years ago are no |
| hours.- Workers are never told where they stand; their | | | | longer adequate for most businesses to effectively |
| performance is not measured. Workers must sense | | | | compete, especially in large metro areas.Remember |
| how they are doing by how they are treated in | | | | the four-minute mile? For years, it was a barrier no |
| after-work drinking sessions with coworkers.Result: | | | | one could imagine breaking. Then on May 6, 1954, a |
| Japanese payrolls are bloated with 2 million to five | | | | British runner, Roger Bannister, finally did it. He ran a |
| million under-utilized workers. Companies' operating | | | | mile in 3: 59.4 minutes. As soon as one man broke the |
| expenses are so high that they can no longer | | | | four-minute barrier, just a few weeks later, Landy, a |
| compete in a fast-changing world market that | | | | runner from Australia, broke Bannister's record. Since |
| demands flexibility.Of course, this is the same system | | | | that time, over 1,000 runners have run a mile in under |
| that allowed Japan to rise from worst to first with | | | | four minutes. In 1958, in Baton Rouge, five runners did it |
| respect to quality. But the system has run its course. | | | | in the same race.How does the productivity of your |
| The time has come for change. | | | | people this year compare to their productivity five |
| We can change too.North American companies may | | | | years ago?What gross profit per payroll dollar are |
| not have the specific name for our "system," but many | | | | your people achieving this year versus five years |
| of the characteristics are practically identical to those | | | | ago?The pressure is on. New productivity records are |
| found in Japan. It's not at all unusual to visit large and | | | | being set every day. The competition is heating up. |
| seemingly progressive North American companies and | | | | These new productivity increases are putting |
| find compensation systems in place that are heavily | | | | increased pressure on gross margins. Companies that |
| based on management discretion:- No merit-based | | | | expect to earn satisfactory bottom lines have no |
| pay.- No job descriptions.- No measurements.- No | | | | choice but to attack operating expenses. And since in |
| formal performance reviews.- No minimum conditions | | | | most organizations approximately 60% of total |
| of employment.- No guidelines for overtime pay.(In | | | | operating expenses reside in personnel-related |
| Japan, white-collar workers have been averaging 60 | | | | expenses (salaries, group medical, workers' comp, |
| hours a month in overtime. Management ignored how | | | | payroll taxes), payroll is the first place to |
| much overtime was wasted, resulting in little additional | | | | concentrate.Change is no longer a choiceIf you're not |
| productivity.)Management has always been a tough | | | | setting performance-based conditions of employment |
| job, but the most profitable firms I observe are | | | | in your organization, you will soon find yourself unable |
| managed by proactive men and women who are | | | | to compete. The gross profit you are able to generate |
| goal-oriented; they set strict standards and reward the | | | | will simply be inadequate to cover your cost of doing |
| employees who meet and exceed those standards. | | | | business.Bill Lee is author of 30 Ways Managers |
| The most effective managers have the reputation for | | | | Shoot Themselves in the foot. $21.95 + $6 S&H. |