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.

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2 Executive summary 4

3 Introduction to Japanese management 7

4 Introduction to American management 8

5 comparisons 9

6 conclusion 17

7 18

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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.

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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

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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

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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.

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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.

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AMERICAN MANAGEMENT

E 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

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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
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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

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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

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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"

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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

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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 cross-
cultural comparisons.

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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.

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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.

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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 Following-
ups 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

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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

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THE END

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