James Van Staveren

Konosuke Mastsushita-‘The god of management’

-‘The Father of lifetime employment’

The beginnings

• Corporate Social Responsibility• Participative management with collective wisdom

• Raise awareness of the successful management approach• Post-Depression reaction-make employees sellers instead

of firing• Organization mission is sacred like a temple, or religion

• Humble merchant; simple, honest and frugal• Strengthen autonomous management

“The company is its people”

Starting the tradition -corporate welfare-

Basic Management Objective: 

" Recognizing our responsibilities as industrialist, we will devote ourselves to the progress and development of society and the well being of people through our business activities, thereby enhancing the quality of life throughout the world.”

Company Creed: 

" Progress and development can only be realized through the combined efforts and cooperation of each employee of our

company. United in spirit, we pledge to perform our corporate duties with dedication, diligence and integrity."

The Seven Principles:

Matsushita’s Business philosophy

http://www.1000ventures.com/business_guide/cs_biz_leaders_matsushita.html

The Seven Principles from 1930

“If we cannot make a profit, that means we are committing a sort of crime against society. We take society's capital, we

take their people, we take their materials, yet without a good profit, we are using precious resources that could be better

used elsewhere.”

-Matsushita•Paternal management tradition, company=family•Noblesse Oblige, obligation to help•Not focused narrowly on shareholders, but people•Help create a spiritually rich society with a high quality of life•Is Konosuke Matsushita is a Philosopher King?

A Neo-Confucian Company

• A new generation of workers with more education and competition

• Offers Three types of salary, like Retirement Allowance Payment system

• Many different offers and contracts based on preference• Focused less on long term employment• Focused less on seniority and more on skill

the company today

• Zaibatsu, Keiretsu • Efficiency of capital, ICOR• Social Stigmas leading to Karōshi, Karōjisatsu• Company loyalty to employees- Syushin-Koyō “lifetime

employment”• Job recruiting- Shinsotsu-Ikkatsu-Saiyō “recruiting of new

graduates”• Romantic view of long labour hours

What's has matsushita left behind?

• Values• Social capital• Government roles• Economic policies

Forces for good in Asia

• How is the relationship between employees/employers managed?

• How do values that spill over into the home life?

• Is there individuality and creativity?

• Are the people trustworthy?• Do they respect and obey

the current social institutions at play?

• What is the happiness of the workforce?…society?

Social capital

• The Original Big Four; Mitsubishi, Mitsui, Sumitomo and Yasuda

• 1920 marketplace boom since the Meiji restoration• Still a big corporation economy, with huge employee base• Companies put employee satisfaction and employees enjoy

benefits:

-company dorms/housing

-company outings/meals

-company sports and festivals

-company songs, collective identity

Soshikiryoku- “spirit, or togetherness”

Zaibatsu to THE KEIRATSU

Investment and efficiency (ICOR)

• Total fixed capital investment as a percentage of GDP

• Investment efficiency, Total investment as a percentage of GDP and price

For G5 countries, generally very similar in wage ratios, so why the inefficiency?

http://blogs.ft.com/andrew-smithers/files/2014/03/Chart-three.-G5-investment-efficiency-1993-2013-ICORs.jpghttp://blogs.ft.com/andrew-smithers/files/2014/03/Chart-three.-G5-investment-efficiency-1993-2013-ICORs.jpg

Social stigmas

• 1990’s international criticism of working hours led to significant reduction since their 1980 levels, to Canada’s level of 1700 hours/year

• Karōshi, death from overwork• Karōjisatsu, suicide from work pressure• Trending higher working hours now, with intrinsic

overtime

Karōshi, KarōjisatsU

• The intensity and quality of labour-effort• The creativity involved in innovation• The relative efficiency gains from cooperative systems• The productive effects of management styles on other labour

http://en.wikipedia.org/wiki/Workforce_productivity

Labour productivity

Working hours change, 20 Yrs

http://www.economist.com/blogs/freeexchange/2013/09/working-hours

Downward sloping productivity

http://www.economist.com/blogs/freeexchange/2013/09/working-hours

Taxi Wage Study:

“When wages are high, drivers will reach their target more quickly and quit early; on low-wage days they will drive longer

hours to reach the target.”

“The man who works so moderately as to be able to work constantly, not only preserves his health the longest, but in the

course of the year, executes the greatest quantity of works.”

-Adam Smith

http://www.economist.com/blogs/freeexchange/2013/09/working-hours

productivity

 •Employees of 30-44 with 5 years work experience

-Japan: 70% job retention in the 10 years following -U.S: 40% job retention in same period and falling

• U.S. Employee now averages 4.6 Years at a job-less spending on employee training-less company benefits

•Primacy on the individual vs primacy on the corporation/state

http://academiccommons.columbia.edu/catalog/ac%3A146976

Japan vs the west

• Company loyalty, family environment• Low Productivity, some overtime 140 hours/month• They don’t actually work, but stay long• They are high stressed, can’t relax• Fear of social humiliation

What’s Chaining them to the office?

• In 2000, the average Matsushita employee worked 190 hours overtime- 2000 hours?

• Many workers have unpaid overtime built-in to the salary• High life expectancy and very happiness quotient• Two faces; public face and private face. How happy are they

really?-less time with kids-less time with wife/husband-less time on weekends at leisure-starvation diet and lack of sleep- very high stress lifestyle

http://www.japan-press.co.jp/2001/2247/matsushita-e.html

 

Does the system work?

• Specialized labour will alienate workers• Capitalism is just a gateway to social reformation• Capital is a “social, economic relation”• Believe that the owners of capital exploit the workers• The societal environment, not specialized labour, has

created alienation

Marx’s Critique

• Senseless romantic view on labour cannot continue• The corporate welfare system in Japan worked well post-

Meiji from successful management leadership from men like Matsushita

• Work became a religion, but real productivity and real happiness suffer

• Big corporations should return to welfare traditions to maintain power

• The system is fortunate to have small demography- doesn’t prove system is still better

• Still works only by chance and circumstance- but it is intrinsically flawed.

Conclusions and recommendations

THANKS for LIStening!

‘Peace’…..And good luck on exams

• Describe the working culture in Japan and what some effects are on the people and society as a whole. What would Karl Marx critique about such culture, and what

would he admire?

• Comment on the history of zaibatsu, through to Matsushita (Panasonic), and the contemporary corporate welfare

culture in Japan.

• Most economists would agree that the Japanese working culture is not in a position to change. Do you agree with

this? Elaborate on your reasons on thinking so?

Questions For exam