During the Showa era, Japanese employees were protected by lifetime employment and seniority-based wages. This system, rooted in the traditional Japanese organizational model dating back to the Kamakura period’s “On and Giri” (mutual obligations), fostered strong loyalty and high motivation among employees.
However, after the economic bubble burst in the early 1990s, Japanese companies faced significant changes. Amid economic stagnation, companies began implementing restructuring measures under the guise of structural reforms to improve short-term performance. This led to the collapse of the lifetime employment and seniority-based wage systems, resulting in many employees losing their jobs.
A pioneering example of this restructuring was Carlos Ghosn’s reforms at Nissan Motor Company. Appointed as CEO in 1999, Ghosn undertook large-scale layoffs to revive the struggling company. His reforms, often referred to as “Ghosn’s roar,” significantly altered traditional Japanese employment practices.
While Ghosn’s restructuring dramatically improved Nissan’s short-term performance, it also dismantled the Japanese-style “On and Giri” relationship based on lifetime employment and seniority-based wages. Consequently, employee loyalty and motivation declined, fundamentally changing the relationship between companies and their employees.
Thus, the traditional Japanese employment practices established during the Showa era were significantly shaken by the economic changes following the bubble burst and Carlos Ghosn’s restructuring measures. Japanese companies now face the challenge of rebuilding relationships with their employees while aiming for short-term performance improvements. Moving forward, it will be crucial for Japanese companies to find ways to enhance employee motivation and maintain loyalty.
In conclusion, the Japanese-style “On and Giri” relationship was indeed disrupted by Carlos Ghosn’s “roar.”
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