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Blending east and west: With difficulties along the way
When foreign management is transplanted to the United States, differences between cultures can lead to conflict or, if properly adapted to the U.S. environment, such differences can result in more rewarding employee-management relations.
Blending East and West: With Difficulties Along the Way
William
D. Torrence
n organization’s labor-management relations system reflects the economic, historical, and cultural settings of the nation in which it was developed. This is important to note because such systems have a range of influences that are crucial to the overall progress and development of the organization’s activities. First, the existing labor-management relations system affects the allocation of resources within the firm and thus has a direct impact on productivity and output levels, as well as on the cost structure. The system does this by estab-
lishing the rules under which workers are assigned to tasks, assigned to work schedules, held to performance standards, granted wages and employee benefits, and permitted or not permitted general intraorganization career mobility. Second, the labor-management relations system impacts on production efficiency through the ways in which both labor and management see their respective roles (either cooperatively or uncooperatively) as technological changes are brought into the
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firm. In addition, the day-to-day operation of the labor-management relations system is crucial to effective and efficient production in terms of how interpersonal and intraorganizational conflicts are resolved to achieve fairness in the workplace and protection against arbitrary treatment. Finally, the network of government rules, policies, and intentions in the country in which the firm is located has a significant impact on the labormanagement relations system. When aspects of a given labormanagement relations system from one culture are transferred to another cultural context, however, influences and impacts of the transplanted system may or may not prove beneficial to the receiving organization. The purpose of this article is to describe and analyze the ongoing attempts to translate and apply portions of the Japanese industrial relations model in a U.S. manufacturing plant located on the Great Plains. The Japanese model, for our purposes, is perceived to be the lifetime employment system, the wages-connected-to-seniority system, and enterprise unionism. The U.S. plant employs U.S. workers who work under primarily U.S. managers, all of whom are operating under U.S. federal and state laws and within the economic, historical, and cultural context of the United States. The firm to be discussed is a Nebraska-based plant of the Kawasaki Motors Corporation (headquartered in California), which is a subsidiary of Kawasaki Heavy Industries Limited of Japan. The plant manufactures motorcycles, three-wheel rough-terrain vehicles, snowmobiles, and jet-skis. Many Japanese firms want to penetrate the large U.S. market as well as respond to the calls for import controls. The Nebraska plant site was chosen, according to a Kawasaki executive, for several reasons: an available labor force, easy access to transportation facilities,
a site with acreage for future expansion, and a healthy business climate. Other things that made the Nebraska location attractive were industrial bond financing, tax exemption on manufacturer’s inventories, a sales and use tax exemption on new equipment, tax exemption on raw materials used in manufacturing, land acquisition costs ($2,500 per acre average in Nebraska versus Japanese sites beginning at $30,000 per acre in 1974), and a right-to-work law. The industrial site of 100 acres, including a 200,000 square foot plant, was purchased in 1974. From the outset, Kawasaki hired Americans for most top administrative posts and drew on local high school graduates, technical school graduates, and the local labor market for its entire plant workforce. For the most part, the workforce includes assembly line workers, welders, paint sprayers, shipping and packing employees, first-line supervisors, and administrative personnel. At the outset first-line supervisors were sent to the Akashi, Japan plant to learn production and fabrication techniques and to serve as training cadre for the rest of the workforce. In turn, Japanese welders and other specialists came to Nebraska for several months as instructors. Production began in January, 1975 on the assembly of motorcycles. The product line was gradually expanded to include jet-skis and snowmobiles. Peak employment reached 700 employees during the period of this study, which was 1975 to 1981. The study concludes with the onset of the severe recession in the second half of 1981.
LIFETIME EMPLOYMENT-THE TRANSLATION IN NEBRASKA
KAWASAKI
The critical distinction in Japanese employment relationships as they concern lifetime
employment appears to revolve around the difference between permanent employees and temporary employees. Regular employees in Japan are expected to -and assumed to be willing to -remain with the firm until retirement, while temporary employees are not expected to remain. Temporary employees expect to be terminated when there is an overabundance of labor and may be employed for varying and often short time periods. Regular employees receive such perquisites as continuous upward movement in both wages and job standing, security of employment, and highly lucrative sums for retirement. Temporary employees are not usually granted these perquisites. In effect, temporary employees serve as the “dismissable slack” of the firm’s total labor force to offset cyclical business downturns. For the permanent employee, then, the lifetime employment system involves an ongoing commitment between employee and employer that is in marked contrast to the relatively high mobility of the U.S. worker. While temporary employees in Japan are crucial components contributing to the operational feasibility of the lifetime employment system concept, they are considered secondclass citizens in comparison with regular employees because they are the last hired and the first fired. In the United States we have a number of groups who would argue that they are also “second-class” citizens when it comes to the principle of last-hired and firstfired. These groups include women, Blacks, the unskilled, and the disadvantaged. lob Security At this point we need to translate the phrase “lifetime employment” into its U.S. counterpart, “job security.” In U.S. parlance, job security entails the worker’s feeling that once hired and performing up to standard and
William D. Torrence has been in the College of Business Administration at the University of Nebraska since 1957. He earned a B.A. degree in journalism, an M.A. in sociology and a Ph.D. in business administration from the University of Nebraska. He holds membership in the following honorary scholastic societies: Beta Gamma Sigma in business administration; Alpha Kappa Delta in sociology; and Kappa Tau Alpha in journalism. Dr. Torrence is a member of the Industrial Relations Research Association and the International Industrial Refations Association. He has published research articles in, among others, Personnel Journal, Labor Law Journal, Harvard Business History Review, Sociology and Social Research, Journal of Hospital Progress, Public Personnel Management, Journal of Collective Negotiations in the Public Sector, Nebraska History, Training and Development Journal, Monthly Labor Review, and Industrial Relations Research Association Series, and has contributed a chapter to Toward an Industrial Gerontology. In 1969, Dr. Torrence received the Distinguished Teaching Award from the University of Nebraska, and in 1970 he was appointed Carl Adolph Happold Professor of Management by The Board of Regents of the University of Nebraska. In 7977 he was awarded an Official Commendation by the United Stares AwnyEurope for “Outstanding Professional Contributions to The NATO/SHAPE Community.” Also, in 1977 he was awarded a University of Nebraska Board of Regents Commendation for “Meritorious Service and Dedication to Improving the Quality of the University.” 25
obeying organizational rules, he or she will (1) participate in and receive the customary perquisites of the job ranging from wage raises to such employee benefits as holidays, vacations, insurance coverage, and pension plan participation and (2) continue to work for the organization until he or she decides to leave. How, then, does Kawasaki-Nebraska operationally translate “lifetime employment” into what we have defined as job security? The major points of concentration here that will serve to underpin the support system for job security are the flexible staffing movement, acceptance of technological change and innovation, and in-plant training for the “retooling” of human resources. The strategies used to generate employee job security at Kawasaki-Nebraska are many and varied. To begin with, there is very careful screening and orientation at point of hire so that potential workers understand exactly what work commitment is expected of them. Accompanying this is the Kawasaki-Nebraska managerial willingness to engage in long-range planning for employees’ full skill development. This includes training on a variety of jobs in the plant so that employees are able to move from one position to another with the requisite skills when the need arises-such as, for instance, when a product’s life cycle ends or when new technologies are introduced. When employees move to different jobs, they don’t lose pay or seniority. At the time of hire workers are carefully instructed that, as a
condition of employment, they may have to make such moves. This form of flexibility also enables employees to gain an overall understanding of the production process and allows them to see how they contribute to the total product. In addition, the long-range development of employee skills includes making them responsible for performing quality work. Considerable care is taken to make sure that employees understand what is and is not acceptable quality on each job in the plant. Instead of using quality circles, which are not part of the actual production line, management provides running statistics on quality to employees periodically throughout the work shift; this immediate feedback permits on-line discussion and remediation by the workers themselves, who decide by consensus on any necessary action. This selfgenerated remediation also helps minimize and temper any conflicts that may arise between line supervisors and the workers. This method of achieving quality-circle-like results also faces the reality that U.S. workers will not, usually, devote after-work time to plant quality problems without compensation. Under the Fair Labor Standards Act, of course, if such time exceeded certain limits, it would be subject to overtime rates. Kawasaki-Nebraska also has a relatively flat organizational structure in terms of managerial levels so that rapid contact can be made between workers, line supervisors, and staff specialists on any problems that might need more extended discussion. This flatter structure permits the more effective use of the next strategy, which is communications.
Communications 26
The communication process at KawasakiNebraska is one of extremely high informa-
tion density. The fullest possible range of production requirements is displayed at various visible and accessible plant locations on an hourly basis, and these data are also displayed to show daily, weekly, and monthly comparisons. This communications approach is bolstered by continuing interaction between the plant’s management and the workers through suggestion systems, bulletin board announcements, letters to the employees and their families, and candid interpersonal conversations. The key tends to be a managerial willingness to talk about everything affecting employees and their jobs, and on a constant basis. Communications are also heightened by the inclusion of employees and their families in a variety of off-the-job social activities. These activities tend to emphasize the family concept and give other family members a fuller understanding of what employees do at their place of work. When the employee has a more serious and immediate communications need, the company uses the “green-card” device. When employees fill out such cards, immediate and careful attention is given to the nature of the problem and to determining a solution, if one is possible. The activities and strategies mentioned above are, obviously, designed to generate a total work environment in which Kawasaki-Nebraska produces a desired product line over the long term, which contributes to greater job security for the worker as well as profitability for the firm.
ment. Of survey forms distributed to approximately 650 employees, 431 were filled out and returned. Of these returns, 426 employees listed aspects they liked, which included employee benefits, the nature of their work, and job security. Negative comments were received from 112 workers about working conditions, overtime, and job grade determinations. Second, as a general rule KawasakiNebraska has not had to advertise for employees since the plant started production. But approximately 100 unsolicited applications are received, on average, each week. Because Lincoln, Nebraska is a community of approximately 170,000 people with an average annual unemployment rate of about 3.3 percent historically, one may draw some inferences about word-of-mouth advertising that boosts Kawasaki-Nebraska as an attractive place of employment. Third, the absenteeism rate remained relatively low-at approximately 2 percent per year- during the 6X-year period covered by our case analysis (January 1975 through October 1981). Fourth, a national survey of 1,500 Kawasaki dealers throughout the United States was used to make an analysis of the quality of Kawasaki-Nebraska products compared with those of Kawasaki-Akashi. Seventy-nine percent of the dealers stated that Kawasaki-Nebraska products were “as good or better” than those of Kawasaki-Akashi on overall quality. The components analyzed included completeness of assembly, mechanical soundness, and paint finish. Finally, although
Measures of Success How can we measure the relative success of these strategies? Without trying to imply direct causality but only to suggest some relationships, we can examine the following items. First, an attitude survey was conducted by the Kawasaki-Nebraska manage-
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precise product output data are not available for examination, output increased 23 percent from 1979 to 1980 and 11 percent from 1980 through the first half of 1981. We now move to the second major component of our analysis, the concept of wages tied to seniority.
WAGE-SENIORITY
SYSTEM
Within the Japanese system of industrial relations, as I understand that system, pay systems tend to be based primarily on the employee’s education, age, and length of service. In Japan, this system supports the lifetime employment system by tying workers to the company. In effect, then, the system of pay based on education and seniority is a ranking system and tends, where it is practiced, to ignore more “objective” methods of assessment about capability. As one observer has said: For the Japanese the established ranking order (based on duration of service within the same group and on age, rather than on individual ability) is overwhelmingly important in fixing the social order and measuring individual social values. [Chic Nakane, Japanese Society (University of California PressBerkeley, 1970)]
Another observer has stated: “Starting wages are decided according to the employee’s level of education rather than his ability, and then basic wages are increased annually according to his length of service.’ [Tadashi A. Hanami, Labor Law and Industrial Relations in Japan, (Kluwer-DeventerThe Netherlands, 1979)J Kawasaki-Nebraska>
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Wage System
In Kawasaki-Nebraska, the plant began operation in 1975 using a base hiring rate (which was competitive in the community)
for each of seven labor grades. Movement of employees through the rate range of their respective labor grades was automatic at three and six months; the amount of the raise was based on merit, which was determined by the assessment of the employee’s performance. These merit assessments were performed at six-month intervals. Retaining six-month time intervals, this approach was expanded and formalized in 1977 through the use of a factor-analysis point system. By 1979, a minimum of 30 percent of the hourly workers who responded in writing to comments on their semiannual performance appraisal forms were protesting the equity of the pay system. Employees objected on the basis of such perceived human evaluative errors as lack of clarity in standards, insufficient evidence, differing judgments among two or more evaluators (as well as those between evaluators and evaluatees), and excessive leniency or strictness by evaluators. As a result, many employees saw the merit-rating system as being both unfair and inconsistent. (As we will see later, these perceptions gave fuel to some union organizing efforts at Kawasaki-Nebraska.) Part of the problem, also, was a relatively young and inexperienced group of supervisory employees. As a result of the high percentage of negative reactions to the merit-pay system, in June of 1979 Kawasaki management changed to a wage-connected-to-seniority system. It is important to note that employee dissatisfaction with the earlier merit system was reflected in low productivity and high scrap volume. These measures reversed significantly after the changeover to pay based on straight seniority. The new system permits pay increases every three months up to nine months’ service and then provides for sixmonth periods between pay increases. The current operational assumption is that if
plant management establishes skill levels and helps the employee develop these skills on the job, such skills will translate into higher levels on the learning curves over time and better performance. This assumption is further bolstered by the previously mentioned emphasis on training. While the typical Japanese bonus system is not involved in this situation, the wage-connected-to-seniority system is overlaid with a skill bonus of one percent, which is related to job grade and added to the hourly rate. Current worker responses show a much higher level of satisfaction with the wage system as evidenced by a 5 percent protest rate compared with the earlier 30 percent protest rate. Inventory
System and Quality
Control
The wage system and the skill bonus at Kawasaki-Nebraska is further strengthened by two critical concepts. First, the plant has adopted the “just-in-time” inventory system. This system can best be visualized by considering each activity in fabrication, welding, painting, and so forth, as simply another station on the assembly line. If the master schedule calls for 100 motorcycles per day, then 100 sets of parts are provided on that day, just in time for use-not a day or more earlier, only to sit in storage. Under this production concept, all of the subassemblies and components that go into the end product are manufactured or delivered as if they were on assembly lines. This is an oversimplification of justin-time methodology because there are very stringent coordination and delivery requirements. However, this brief explanation does serve to highlight the following core ideas and advantages of the just-in-time system. Costs incurred for storage space, indirect labor, and accompanying employee benefit
costs are eliminated. Also, costs that arise from warehousing and accounting for these materials and parts are nonexistent, and interest costs on the inventory are reduced. The savings derived permit, among other things, the payment of a skill bonus. From 1979 (the year that “just-in-time” was introduced) to 1980, dollars invested in inventory declined by approximately 14 percent and, at last report, they were continuing downward. Next, the on-line quality control discussed earlier is aimed at building products that are ready to be shipped instead of products that must be rebuilt because of production flaws. The dollars saved in producing the product right the first time enhances the plant’s ability to pay good wages. This latter idea is not necessarily a novel one, but it is impressed on the workers at Kawasaki-Nebraska by using the entire range of communications devices that are available.
UNION ATTEMPTSTO ORGANIZE KAWASAKI-NEBRASKA The State of Nebraska has a total population of approximately 1,5OO,OOOpeople and a nonagricultural workforce of approximately 627,500 employees. Of this latter number 114,000, or slightly more than 18 percent, are members of unions or associations. Nebraska ranks 34th of the 50 states in terms of total union and association membership as a percent of total workforce. In the United States, unions usually stand ready to organize any group of workers who show an interest in being represented. The major unions interested in organizing the Kawasaki-Nebraska workers included the Teamsters, the Allied Industrial Workers, and the United Automobile Workers. The first ripe opportunity to organ-
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ize the plant occurred in 1978 as the result of a communications foulup. The background was this: From the time that the plant had opened in 1975, Kawasaki-Nebraska employees had been covered by a health insurance program with a nationally known U.S. insurance carrier. Sometime in 1978 Kawasaki management decided it could save a considerable amount of money by shifting to a self-insured program with administrative services only provided by a different carrier on a fee basis. During the changeover period, a number of employees submitted claims to the original carrier. These claims were returned to the employees with the notation that the original carrier was no longer liable because the policy was no longer in effect. This happened in spite of the fact that, through negotiations with Kawasaki-Nebraska’s home office in California, the original carrier had agreed to send any residual claims to the new processing insurance carrier. When the situation came to their attention, KawasakiNebraska managers explained that they had no intention of stopping insurance coverage and that all claims would be honored. But the damage had been done. Because of the communications breakdown, many employees believed their insurance protection was being summarily abandoned, and several turned to the United Automobile Workers union, seeking representation on the grounds that they needed protection from arbitrary treatment. The UAW was able to get 38 percent of the workers to sign union cards, and therefore petitioned the National Labor Relations Board for a representation election. The NLRB conducted an election in June 1978, and the union lost by a vote of 257 against representation to 135 for representation. The object lesson for the KawasakiNebraska management was to continue to open, clarify, and expand its communications channels-particularly before it took
actions that affected employees. Adding to the the confusion of the period, a number of top-level management changes took place, and new personalities entered the picture. Following its first defeat, the UAW filed for a new representation election on the grounds that, among other things, the meritpay system was unfair. The union also embarked on an authorization card sign-up campaign, and this time obtained signatures from nearly 50 percent of the eligible employees. The NLRB directed that a second election be held in April 1979, and the union was narrowly defeated by a vote of 257 against to 207 for representation. After the second election Kawasaki-Nebraska management revised its pay system from the merit standard to the seniority standard we discussed previously. These two unionization attempts, according to a management representative, reinforced the virtues of a seniority-based pay system both because of the difficulties mentioned earlier and the problem of monitoring merit characteristics in a relatively large plant. Management was also made even more conscious of its earlier belief in the need for careful communications with employees - careful communications that include listening to workers, responding to legitimate needs and concerns, and providing fair and competitive treatment. Management also realized that it ought to generate a positive company image not only internally, but also in the community. One of management’s concerns was that, because of the organizing attempts by the UAW, it was perceived in some negative fashion in the community. To rectify this situation, KawasakiNebraska embarked on an extensive community public relations campaign in the summer of 1979. This included speeches by plant spokesmen before a variety of civic organizations, extensive plant tours, and in-
volvement with and financial support for a range of educational activities throughout the state.
REDUCING
THE
WORKFORCE
One of the later manifestations of concern for worker welfare and civic duty occurred in October 1981. At the outset of the recent U.S. recession, there was a decline in demand for Kawasaki-Nebraska’s products and, as a consequence, the company had too many workers in its plant. Rather than terminate or lay off excess employees, Kawasaki-Nebraska management approached the City of Lincoln and offered to “loan” the city a number of employees for city projects. The rubrics for this arrangement as specified by the company were as follows: 1. Kawasaki Motors, Inc, USA will provide ployees and a supervisor to perform special for the City of Lincoln.
ten emprojects
2. The projects selected would be projects [that were] not in the (city) budget for the year- therefore, [the “loaned” employees] would not displace any currently employed city workers, 3. Kawasaki would have the what projects would be worked time [to be spent on each].
final decision as to on and the length of
4. Kawasaki would have the option of recalling employees for work in the plant on short notice proximately one week).
the (ap-
5. The employees would continue to receive pay and benefits from Kawasaki (News Release, Kawasaki Motors, Inc., USA, Oct. 21, 1981, Lincoln, Nebraska).
Kawasaki-Nebraska management realized that there were a number of potential benefits, aside from civic contribution and approval. Among those benefits: (1) the “loaned” employees’ wages and benefits might be considered a charitable contribution to a nonprofit organization for tax purposes, (2) the company would maintain a more level state unemployment insurance tax rate, and (3) trained employees would be available if business improved. The city accepted the offer and, as a result, a number of congratulatory messages were received by Kawasaki management, including a telegram from President Reagan complimenting the company on its effort to maintain a constant level of employment. Kawasaki employees worked on several projects of public building renovation and public office furniture repair, with some workers remaining on these assignments for nearly six months. Even though this analysis of Kawasaki-Nebraska ends as of October 1981, I want to include one more management initiative that warrants attention. As the general economic climate in the United States continued to deteriorate, demand for such recreational vehicles as those manufactured in Lincoln diminished rapidly. It became ap-
“The objectlessonfor , . . managemenfwas to confinueto open, clarib, and expand ifs cornmunicafionschannels-particularly before if fook actions fhaf affected employees. If
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parent to Kawasaki-Nebraska that it was no longer feasible to retain its entire remaining workforce because of the magnitude of costs involved. With no union contract spelling out rules for layoffs, Kawasaki could have summarily dismissed employees on almost any basis it chose, but it chose to abide by the seniority principle. Kawasaki management also added a severance pay policy for which it had no contractual or legal liability. In lieu of mandatory terminations, two options were presented to the employees-voluntary resignation or voluntary layoff. The options were as follows: Option One: Kawasaki is prepared to offer a lump-sum settlement [as spelled out below] to any employee who wishes to voluntarily terminate employment with the company. Employees who self-terminate would be eligible for rehire at a future date if they reapply to the personnel department. Length of Service Less than two years 2 to 3 years 3 to 4 years 4 to 5 years 5 or more years
Amount
of Settlement $1,000 1,500
2,~ 2,500 3,000
Option Two: Any employee choosing this option would be eligible to apply for and receive unemployment compensation benefits. Kawasaki would guarantee each employee that he could return to work in six months or possibly sooner if a need developed. He would be required to return to work within one weeks notice via registered letter. Benefits would not be extended during layoff but would be in effect immediately upon return. Employees would suffer no loss in seniority upon return (Letter to Employees, Kawasaki Moton Corporation, USA, Lincoln, Nebraska, October 23, 1981).
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When they received this communication, 23 employees accepted Option One, and seven employees accepted Option Two. The “loaned-out” workers’ episode was, at once, an effective short-term deployment of excess manpower from the standpoint
of the workers, the company, and the community, and a near-zero cost public relations program on a national basis for the firm. The severance pay and voluntary layoff options, although adding some workers to the unemployment roles, created and increased positive images of the company in the minds of many employees and community citizens. One could argue, given the economic circumstances, that both of the above strategies typify the concept of optimal joint utility. Finally, Kawasaki-Nebraska has tried to further limit employee layoffs by expanding the plant maintenance function and assigning a number of employees to work-sharing and housekeeping functions.
CONCLUSIONS
There is danger in trying to generalize from a single case study such as that of KawasakiNebraska, and we will avoid doing so. However, it is important to contemplate and speculate about particular findings. Difficulties in translating work-related rules from one culture to another may reside in cultural differences. The differences can, in a general sense, be stated as follows: Japan has, relatively speaking, a highly disciplined, closed, monoreligious, and homogeneous culture, while the United States has a heterogeneous, multireligious, nonconforming, and litigious society. The concept of “family” and “group” in Japan appears to be paramount, while the concepts of “self” and “self-fulfillment” seem to predominate in U.S. culture. The respective culture themes rest in, among other things, geographic size, richness of resources, and the relative need to depend on self-sacrifice and hard work to remain viable as a cultural and economic entity. In Japan, with its historical respect for hierarchical authority, its small geographic
size, and its relatively limited natural resources base, the virtues of social and workplace harmony reinforce the efficacy of mutual trust and obligation, which in turn lead to survival. This has led to a considerably limited consciousness of “rights.” In the United States, on the other hand, with its diversified scope, both physical and societal, the emphasis is on people’s individuality and their constitutionally and statutorily guaranteed rights to quarrel about and pursue those rights and equities. Relative to this latter point, it is not surprising that KawasakiNebraska employees turned to the union for aid when they “perceived” that an earlier bestowed job perquisite - insurance coverage -was apparently being discontinued. It may be in the U.S. industrial worker’s nature to fear that what can be granted unilaterally can be removed in the same way; even without a union the insurance plan was seen as a part of the employment arrangement and therefore a “right,” Then, too, because the workers believed the merit-pay plan to be unfair for a variety of reasons, that system offended their sense of equity and led, as we have seen, to a renewed call for union representation. The historical practices of collective bargaining in the United States permit workers to argue that codified rights are protected rights and, thus, immune from management expediency. In spite of two union-organizing episodes, the balance of Kawasaki-Nebraska’s relationship with its workforce has been strong enough to prevent success by the union in its attempts to represent employees -at least to this point in time. A caution, however, seems important. When a foreign management tries to impose its own alien form of labor relations in the U.S. cultural setting, where manufacturing labor-management relations are adversarially oriented to a significant degree, major managerial mal-
functions, whether intentional or inadvertent, may activate the employees’ latent desires for representation and codification of rights and equities. Excluding the recent period of severe recession, job security as manifested by flexibility of staff movement permits broader job classes so that employees do a wider variety of tasks, thus increasing their own “human capital” value. This seems to be a relatively effective approach and was readily accepted by the workers. Buttressed by the teamwork concept of on-line quality control and “just-in-time” inventory control, the connection between product quality, wage improvement, and job security could be clearly perceived by the employees. When the overall concept of job security was further reinforced by the concerned attitude of Kawasaki-Nebraska management (as evidenced by “loaned-out” workers and severance pay offerings), employee loyalty was heightened. This latter point may be characterized as the “concern for family” approach to worker well-being. It may be suggested that the most significant problem faced by KawasakiNebraska management (and probably by other foreign managements as well) was to achieve credibility and worker acceptance of its approach to employee-employer relations before its inexperience in the U.S. cultural setting aroused unionizing attempts. This is not to suggest a posture either for or against the unionization of any firm or plant, but simply to suggest that in certain environments management may not have much time to make its case. Consequently, it would seem that cross-cultural transfer of different management approaches demands a very careful assessment of the local cultural context and detailed planning before the event. Finally, it may be argued that Kawasaki-Nebraska management was using a union-avoidance approach toward its
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workers. However, union avoidance may take one of two general forms. One strategy is the direct union-suppression approach, while the other is an indirect union-substitution. The former management strategy is negative in character and manifests itself in hostility, low wages, absence of professional management, and litigiousness of management toward labor. The latter management strategy is positive and is characterized by, among other things, competitive wage and fringe benefit levels, such human support programs as training-communication-information networks, sharing of decision making, a complaint and grievance procedure, and an equitable wage and salary system that
SELECTED
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BIBLIOGRAPHY
For a useful discussion of the interaction of a firm’s labor-management relations system and international competitiveness see Study of U.S. Competitiveness: Study of Export Trade Policy as Mandated in Section 1110 of the Trade Agreements Act of 1979 (Bureau of International Labor Affairs, U.S. Dept. of Labor, July 1980). Several books provide insights into the concepts of lifetime employment, temporary employment, and the seniority-wage system: Tadashi Hanami’s Labor Relations in Japan Today (Kodansha International, 1979) and his Labour Law and Industrial Relations in Japan (Kluwer-Deventer-The Netherlands, 1979); and Chie Nakane’s Japanese Society (University of California Press-Berkeley, 1970). An excellent discussion of the “just-in-time” inventory system is contained in Richard J. Schonbergeis Japanese Manufacturing Techniques: Nine Hidden Lessons in Simplicity (The Free Press, 1982). For a pertinent discussion of union avoidance see Thomas Kochan’s Collective Bargaining
rewards both merit and seniority. The analysis of the Kawasaki-Nebraska case appears to support the use of the indirect union-substitution strategy by foreign managements that want
to avoid
unionization.
This study ends as of 1981, however, and does not discuss several unfair labor practice charges filed by the United Automobile Workers that are in various stages of litigation. The alleged unfair practices include termination of employment for union activity and threats to close the plant to avoid
unionization.
From this perspective,
of course, the union would probably argue that Kawasaki-Nebraska was engaged in direct union suppression.
and Industrial Relations: From Theory to Policy and Practice (Richard D. Irwin, Inc, 1980).
ACKNOWLEDGMENTS
Appreciation is here expressed to the managers and employees of Kawasaki Motors Corporation of Lincoln, Nebraska for allowing observation of the production activities and examination of memoranda. Special thanks are due to Robert Summers, former personnel director, for extended discussions and clarifications. An earlier version of this paper was given at the Sixth World Congress, International Industrial Relations Association in Kyoto, Japan in March, 1983.
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Blending East and West: With Difficulties Along the Way
William
D. Torrence
n organization’s labor-management relations system reflects the economic, historical, and cultural settings of the nation in which it was developed. This is important to note because such systems have a range of influences that are crucial to the overall progress and development of the organization’s activities. First, the existing labor-management relations system affects the allocation of resources within the firm and thus has a direct impact on productivity and output levels, as well as on the cost structure. The system does this by estab-
lishing the rules under which workers are assigned to tasks, assigned to work schedules, held to performance standards, granted wages and employee benefits, and permitted or not permitted general intraorganization career mobility. Second, the labor-management relations system impacts on production efficiency through the ways in which both labor and management see their respective roles (either cooperatively or uncooperatively) as technological changes are brought into the
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firm. In addition, the day-to-day operation of the labor-management relations system is crucial to effective and efficient production in terms of how interpersonal and intraorganizational conflicts are resolved to achieve fairness in the workplace and protection against arbitrary treatment. Finally, the network of government rules, policies, and intentions in the country in which the firm is located has a significant impact on the labormanagement relations system. When aspects of a given labormanagement relations system from one culture are transferred to another cultural context, however, influences and impacts of the transplanted system may or may not prove beneficial to the receiving organization. The purpose of this article is to describe and analyze the ongoing attempts to translate and apply portions of the Japanese industrial relations model in a U.S. manufacturing plant located on the Great Plains. The Japanese model, for our purposes, is perceived to be the lifetime employment system, the wages-connected-to-seniority system, and enterprise unionism. The U.S. plant employs U.S. workers who work under primarily U.S. managers, all of whom are operating under U.S. federal and state laws and within the economic, historical, and cultural context of the United States. The firm to be discussed is a Nebraska-based plant of the Kawasaki Motors Corporation (headquartered in California), which is a subsidiary of Kawasaki Heavy Industries Limited of Japan. The plant manufactures motorcycles, three-wheel rough-terrain vehicles, snowmobiles, and jet-skis. Many Japanese firms want to penetrate the large U.S. market as well as respond to the calls for import controls. The Nebraska plant site was chosen, according to a Kawasaki executive, for several reasons: an available labor force, easy access to transportation facilities,
a site with acreage for future expansion, and a healthy business climate. Other things that made the Nebraska location attractive were industrial bond financing, tax exemption on manufacturer’s inventories, a sales and use tax exemption on new equipment, tax exemption on raw materials used in manufacturing, land acquisition costs ($2,500 per acre average in Nebraska versus Japanese sites beginning at $30,000 per acre in 1974), and a right-to-work law. The industrial site of 100 acres, including a 200,000 square foot plant, was purchased in 1974. From the outset, Kawasaki hired Americans for most top administrative posts and drew on local high school graduates, technical school graduates, and the local labor market for its entire plant workforce. For the most part, the workforce includes assembly line workers, welders, paint sprayers, shipping and packing employees, first-line supervisors, and administrative personnel. At the outset first-line supervisors were sent to the Akashi, Japan plant to learn production and fabrication techniques and to serve as training cadre for the rest of the workforce. In turn, Japanese welders and other specialists came to Nebraska for several months as instructors. Production began in January, 1975 on the assembly of motorcycles. The product line was gradually expanded to include jet-skis and snowmobiles. Peak employment reached 700 employees during the period of this study, which was 1975 to 1981. The study concludes with the onset of the severe recession in the second half of 1981.
LIFETIME EMPLOYMENT-THE TRANSLATION IN NEBRASKA
KAWASAKI
The critical distinction in Japanese employment relationships as they concern lifetime
employment appears to revolve around the difference between permanent employees and temporary employees. Regular employees in Japan are expected to -and assumed to be willing to -remain with the firm until retirement, while temporary employees are not expected to remain. Temporary employees expect to be terminated when there is an overabundance of labor and may be employed for varying and often short time periods. Regular employees receive such perquisites as continuous upward movement in both wages and job standing, security of employment, and highly lucrative sums for retirement. Temporary employees are not usually granted these perquisites. In effect, temporary employees serve as the “dismissable slack” of the firm’s total labor force to offset cyclical business downturns. For the permanent employee, then, the lifetime employment system involves an ongoing commitment between employee and employer that is in marked contrast to the relatively high mobility of the U.S. worker. While temporary employees in Japan are crucial components contributing to the operational feasibility of the lifetime employment system concept, they are considered secondclass citizens in comparison with regular employees because they are the last hired and the first fired. In the United States we have a number of groups who would argue that they are also “second-class” citizens when it comes to the principle of last-hired and firstfired. These groups include women, Blacks, the unskilled, and the disadvantaged. lob Security At this point we need to translate the phrase “lifetime employment” into its U.S. counterpart, “job security.” In U.S. parlance, job security entails the worker’s feeling that once hired and performing up to standard and
William D. Torrence has been in the College of Business Administration at the University of Nebraska since 1957. He earned a B.A. degree in journalism, an M.A. in sociology and a Ph.D. in business administration from the University of Nebraska. He holds membership in the following honorary scholastic societies: Beta Gamma Sigma in business administration; Alpha Kappa Delta in sociology; and Kappa Tau Alpha in journalism. Dr. Torrence is a member of the Industrial Relations Research Association and the International Industrial Refations Association. He has published research articles in, among others, Personnel Journal, Labor Law Journal, Harvard Business History Review, Sociology and Social Research, Journal of Hospital Progress, Public Personnel Management, Journal of Collective Negotiations in the Public Sector, Nebraska History, Training and Development Journal, Monthly Labor Review, and Industrial Relations Research Association Series, and has contributed a chapter to Toward an Industrial Gerontology. In 1969, Dr. Torrence received the Distinguished Teaching Award from the University of Nebraska, and in 1970 he was appointed Carl Adolph Happold Professor of Management by The Board of Regents of the University of Nebraska. In 7977 he was awarded an Official Commendation by the United Stares AwnyEurope for “Outstanding Professional Contributions to The NATO/SHAPE Community.” Also, in 1977 he was awarded a University of Nebraska Board of Regents Commendation for “Meritorious Service and Dedication to Improving the Quality of the University.” 25
obeying organizational rules, he or she will (1) participate in and receive the customary perquisites of the job ranging from wage raises to such employee benefits as holidays, vacations, insurance coverage, and pension plan participation and (2) continue to work for the organization until he or she decides to leave. How, then, does Kawasaki-Nebraska operationally translate “lifetime employment” into what we have defined as job security? The major points of concentration here that will serve to underpin the support system for job security are the flexible staffing movement, acceptance of technological change and innovation, and in-plant training for the “retooling” of human resources. The strategies used to generate employee job security at Kawasaki-Nebraska are many and varied. To begin with, there is very careful screening and orientation at point of hire so that potential workers understand exactly what work commitment is expected of them. Accompanying this is the Kawasaki-Nebraska managerial willingness to engage in long-range planning for employees’ full skill development. This includes training on a variety of jobs in the plant so that employees are able to move from one position to another with the requisite skills when the need arises-such as, for instance, when a product’s life cycle ends or when new technologies are introduced. When employees move to different jobs, they don’t lose pay or seniority. At the time of hire workers are carefully instructed that, as a
condition of employment, they may have to make such moves. This form of flexibility also enables employees to gain an overall understanding of the production process and allows them to see how they contribute to the total product. In addition, the long-range development of employee skills includes making them responsible for performing quality work. Considerable care is taken to make sure that employees understand what is and is not acceptable quality on each job in the plant. Instead of using quality circles, which are not part of the actual production line, management provides running statistics on quality to employees periodically throughout the work shift; this immediate feedback permits on-line discussion and remediation by the workers themselves, who decide by consensus on any necessary action. This selfgenerated remediation also helps minimize and temper any conflicts that may arise between line supervisors and the workers. This method of achieving quality-circle-like results also faces the reality that U.S. workers will not, usually, devote after-work time to plant quality problems without compensation. Under the Fair Labor Standards Act, of course, if such time exceeded certain limits, it would be subject to overtime rates. Kawasaki-Nebraska also has a relatively flat organizational structure in terms of managerial levels so that rapid contact can be made between workers, line supervisors, and staff specialists on any problems that might need more extended discussion. This flatter structure permits the more effective use of the next strategy, which is communications.
Communications 26
The communication process at KawasakiNebraska is one of extremely high informa-
tion density. The fullest possible range of production requirements is displayed at various visible and accessible plant locations on an hourly basis, and these data are also displayed to show daily, weekly, and monthly comparisons. This communications approach is bolstered by continuing interaction between the plant’s management and the workers through suggestion systems, bulletin board announcements, letters to the employees and their families, and candid interpersonal conversations. The key tends to be a managerial willingness to talk about everything affecting employees and their jobs, and on a constant basis. Communications are also heightened by the inclusion of employees and their families in a variety of off-the-job social activities. These activities tend to emphasize the family concept and give other family members a fuller understanding of what employees do at their place of work. When the employee has a more serious and immediate communications need, the company uses the “green-card” device. When employees fill out such cards, immediate and careful attention is given to the nature of the problem and to determining a solution, if one is possible. The activities and strategies mentioned above are, obviously, designed to generate a total work environment in which Kawasaki-Nebraska produces a desired product line over the long term, which contributes to greater job security for the worker as well as profitability for the firm.
ment. Of survey forms distributed to approximately 650 employees, 431 were filled out and returned. Of these returns, 426 employees listed aspects they liked, which included employee benefits, the nature of their work, and job security. Negative comments were received from 112 workers about working conditions, overtime, and job grade determinations. Second, as a general rule KawasakiNebraska has not had to advertise for employees since the plant started production. But approximately 100 unsolicited applications are received, on average, each week. Because Lincoln, Nebraska is a community of approximately 170,000 people with an average annual unemployment rate of about 3.3 percent historically, one may draw some inferences about word-of-mouth advertising that boosts Kawasaki-Nebraska as an attractive place of employment. Third, the absenteeism rate remained relatively low-at approximately 2 percent per year- during the 6X-year period covered by our case analysis (January 1975 through October 1981). Fourth, a national survey of 1,500 Kawasaki dealers throughout the United States was used to make an analysis of the quality of Kawasaki-Nebraska products compared with those of Kawasaki-Akashi. Seventy-nine percent of the dealers stated that Kawasaki-Nebraska products were “as good or better” than those of Kawasaki-Akashi on overall quality. The components analyzed included completeness of assembly, mechanical soundness, and paint finish. Finally, although
Measures of Success How can we measure the relative success of these strategies? Without trying to imply direct causality but only to suggest some relationships, we can examine the following items. First, an attitude survey was conducted by the Kawasaki-Nebraska manage-
27
precise product output data are not available for examination, output increased 23 percent from 1979 to 1980 and 11 percent from 1980 through the first half of 1981. We now move to the second major component of our analysis, the concept of wages tied to seniority.
WAGE-SENIORITY
SYSTEM
Within the Japanese system of industrial relations, as I understand that system, pay systems tend to be based primarily on the employee’s education, age, and length of service. In Japan, this system supports the lifetime employment system by tying workers to the company. In effect, then, the system of pay based on education and seniority is a ranking system and tends, where it is practiced, to ignore more “objective” methods of assessment about capability. As one observer has said: For the Japanese the established ranking order (based on duration of service within the same group and on age, rather than on individual ability) is overwhelmingly important in fixing the social order and measuring individual social values. [Chic Nakane, Japanese Society (University of California PressBerkeley, 1970)]
Another observer has stated: “Starting wages are decided according to the employee’s level of education rather than his ability, and then basic wages are increased annually according to his length of service.’ [Tadashi A. Hanami, Labor Law and Industrial Relations in Japan, (Kluwer-DeventerThe Netherlands, 1979)J Kawasaki-Nebraska>
28
Wage System
In Kawasaki-Nebraska, the plant began operation in 1975 using a base hiring rate (which was competitive in the community)
for each of seven labor grades. Movement of employees through the rate range of their respective labor grades was automatic at three and six months; the amount of the raise was based on merit, which was determined by the assessment of the employee’s performance. These merit assessments were performed at six-month intervals. Retaining six-month time intervals, this approach was expanded and formalized in 1977 through the use of a factor-analysis point system. By 1979, a minimum of 30 percent of the hourly workers who responded in writing to comments on their semiannual performance appraisal forms were protesting the equity of the pay system. Employees objected on the basis of such perceived human evaluative errors as lack of clarity in standards, insufficient evidence, differing judgments among two or more evaluators (as well as those between evaluators and evaluatees), and excessive leniency or strictness by evaluators. As a result, many employees saw the merit-rating system as being both unfair and inconsistent. (As we will see later, these perceptions gave fuel to some union organizing efforts at Kawasaki-Nebraska.) Part of the problem, also, was a relatively young and inexperienced group of supervisory employees. As a result of the high percentage of negative reactions to the merit-pay system, in June of 1979 Kawasaki management changed to a wage-connected-to-seniority system. It is important to note that employee dissatisfaction with the earlier merit system was reflected in low productivity and high scrap volume. These measures reversed significantly after the changeover to pay based on straight seniority. The new system permits pay increases every three months up to nine months’ service and then provides for sixmonth periods between pay increases. The current operational assumption is that if
plant management establishes skill levels and helps the employee develop these skills on the job, such skills will translate into higher levels on the learning curves over time and better performance. This assumption is further bolstered by the previously mentioned emphasis on training. While the typical Japanese bonus system is not involved in this situation, the wage-connected-to-seniority system is overlaid with a skill bonus of one percent, which is related to job grade and added to the hourly rate. Current worker responses show a much higher level of satisfaction with the wage system as evidenced by a 5 percent protest rate compared with the earlier 30 percent protest rate. Inventory
System and Quality
Control
The wage system and the skill bonus at Kawasaki-Nebraska is further strengthened by two critical concepts. First, the plant has adopted the “just-in-time” inventory system. This system can best be visualized by considering each activity in fabrication, welding, painting, and so forth, as simply another station on the assembly line. If the master schedule calls for 100 motorcycles per day, then 100 sets of parts are provided on that day, just in time for use-not a day or more earlier, only to sit in storage. Under this production concept, all of the subassemblies and components that go into the end product are manufactured or delivered as if they were on assembly lines. This is an oversimplification of justin-time methodology because there are very stringent coordination and delivery requirements. However, this brief explanation does serve to highlight the following core ideas and advantages of the just-in-time system. Costs incurred for storage space, indirect labor, and accompanying employee benefit
costs are eliminated. Also, costs that arise from warehousing and accounting for these materials and parts are nonexistent, and interest costs on the inventory are reduced. The savings derived permit, among other things, the payment of a skill bonus. From 1979 (the year that “just-in-time” was introduced) to 1980, dollars invested in inventory declined by approximately 14 percent and, at last report, they were continuing downward. Next, the on-line quality control discussed earlier is aimed at building products that are ready to be shipped instead of products that must be rebuilt because of production flaws. The dollars saved in producing the product right the first time enhances the plant’s ability to pay good wages. This latter idea is not necessarily a novel one, but it is impressed on the workers at Kawasaki-Nebraska by using the entire range of communications devices that are available.
UNION ATTEMPTSTO ORGANIZE KAWASAKI-NEBRASKA The State of Nebraska has a total population of approximately 1,5OO,OOOpeople and a nonagricultural workforce of approximately 627,500 employees. Of this latter number 114,000, or slightly more than 18 percent, are members of unions or associations. Nebraska ranks 34th of the 50 states in terms of total union and association membership as a percent of total workforce. In the United States, unions usually stand ready to organize any group of workers who show an interest in being represented. The major unions interested in organizing the Kawasaki-Nebraska workers included the Teamsters, the Allied Industrial Workers, and the United Automobile Workers. The first ripe opportunity to organ-
29
30
ize the plant occurred in 1978 as the result of a communications foulup. The background was this: From the time that the plant had opened in 1975, Kawasaki-Nebraska employees had been covered by a health insurance program with a nationally known U.S. insurance carrier. Sometime in 1978 Kawasaki management decided it could save a considerable amount of money by shifting to a self-insured program with administrative services only provided by a different carrier on a fee basis. During the changeover period, a number of employees submitted claims to the original carrier. These claims were returned to the employees with the notation that the original carrier was no longer liable because the policy was no longer in effect. This happened in spite of the fact that, through negotiations with Kawasaki-Nebraska’s home office in California, the original carrier had agreed to send any residual claims to the new processing insurance carrier. When the situation came to their attention, KawasakiNebraska managers explained that they had no intention of stopping insurance coverage and that all claims would be honored. But the damage had been done. Because of the communications breakdown, many employees believed their insurance protection was being summarily abandoned, and several turned to the United Automobile Workers union, seeking representation on the grounds that they needed protection from arbitrary treatment. The UAW was able to get 38 percent of the workers to sign union cards, and therefore petitioned the National Labor Relations Board for a representation election. The NLRB conducted an election in June 1978, and the union lost by a vote of 257 against representation to 135 for representation. The object lesson for the KawasakiNebraska management was to continue to open, clarify, and expand its communications channels-particularly before it took
actions that affected employees. Adding to the the confusion of the period, a number of top-level management changes took place, and new personalities entered the picture. Following its first defeat, the UAW filed for a new representation election on the grounds that, among other things, the meritpay system was unfair. The union also embarked on an authorization card sign-up campaign, and this time obtained signatures from nearly 50 percent of the eligible employees. The NLRB directed that a second election be held in April 1979, and the union was narrowly defeated by a vote of 257 against to 207 for representation. After the second election Kawasaki-Nebraska management revised its pay system from the merit standard to the seniority standard we discussed previously. These two unionization attempts, according to a management representative, reinforced the virtues of a seniority-based pay system both because of the difficulties mentioned earlier and the problem of monitoring merit characteristics in a relatively large plant. Management was also made even more conscious of its earlier belief in the need for careful communications with employees - careful communications that include listening to workers, responding to legitimate needs and concerns, and providing fair and competitive treatment. Management also realized that it ought to generate a positive company image not only internally, but also in the community. One of management’s concerns was that, because of the organizing attempts by the UAW, it was perceived in some negative fashion in the community. To rectify this situation, KawasakiNebraska embarked on an extensive community public relations campaign in the summer of 1979. This included speeches by plant spokesmen before a variety of civic organizations, extensive plant tours, and in-
volvement with and financial support for a range of educational activities throughout the state.
REDUCING
THE
WORKFORCE
One of the later manifestations of concern for worker welfare and civic duty occurred in October 1981. At the outset of the recent U.S. recession, there was a decline in demand for Kawasaki-Nebraska’s products and, as a consequence, the company had too many workers in its plant. Rather than terminate or lay off excess employees, Kawasaki-Nebraska management approached the City of Lincoln and offered to “loan” the city a number of employees for city projects. The rubrics for this arrangement as specified by the company were as follows: 1. Kawasaki Motors, Inc, USA will provide ployees and a supervisor to perform special for the City of Lincoln.
ten emprojects
2. The projects selected would be projects [that were] not in the (city) budget for the year- therefore, [the “loaned” employees] would not displace any currently employed city workers, 3. Kawasaki would have the what projects would be worked time [to be spent on each].
final decision as to on and the length of
4. Kawasaki would have the option of recalling employees for work in the plant on short notice proximately one week).
the (ap-
5. The employees would continue to receive pay and benefits from Kawasaki (News Release, Kawasaki Motors, Inc., USA, Oct. 21, 1981, Lincoln, Nebraska).
Kawasaki-Nebraska management realized that there were a number of potential benefits, aside from civic contribution and approval. Among those benefits: (1) the “loaned” employees’ wages and benefits might be considered a charitable contribution to a nonprofit organization for tax purposes, (2) the company would maintain a more level state unemployment insurance tax rate, and (3) trained employees would be available if business improved. The city accepted the offer and, as a result, a number of congratulatory messages were received by Kawasaki management, including a telegram from President Reagan complimenting the company on its effort to maintain a constant level of employment. Kawasaki employees worked on several projects of public building renovation and public office furniture repair, with some workers remaining on these assignments for nearly six months. Even though this analysis of Kawasaki-Nebraska ends as of October 1981, I want to include one more management initiative that warrants attention. As the general economic climate in the United States continued to deteriorate, demand for such recreational vehicles as those manufactured in Lincoln diminished rapidly. It became ap-
“The objectlessonfor , . . managemenfwas to confinueto open, clarib, and expand ifs cornmunicafionschannels-particularly before if fook actions fhaf affected employees. If
31
parent to Kawasaki-Nebraska that it was no longer feasible to retain its entire remaining workforce because of the magnitude of costs involved. With no union contract spelling out rules for layoffs, Kawasaki could have summarily dismissed employees on almost any basis it chose, but it chose to abide by the seniority principle. Kawasaki management also added a severance pay policy for which it had no contractual or legal liability. In lieu of mandatory terminations, two options were presented to the employees-voluntary resignation or voluntary layoff. The options were as follows: Option One: Kawasaki is prepared to offer a lump-sum settlement [as spelled out below] to any employee who wishes to voluntarily terminate employment with the company. Employees who self-terminate would be eligible for rehire at a future date if they reapply to the personnel department. Length of Service Less than two years 2 to 3 years 3 to 4 years 4 to 5 years 5 or more years
Amount
of Settlement $1,000 1,500
2,~ 2,500 3,000
Option Two: Any employee choosing this option would be eligible to apply for and receive unemployment compensation benefits. Kawasaki would guarantee each employee that he could return to work in six months or possibly sooner if a need developed. He would be required to return to work within one weeks notice via registered letter. Benefits would not be extended during layoff but would be in effect immediately upon return. Employees would suffer no loss in seniority upon return (Letter to Employees, Kawasaki Moton Corporation, USA, Lincoln, Nebraska, October 23, 1981).
32
When they received this communication, 23 employees accepted Option One, and seven employees accepted Option Two. The “loaned-out” workers’ episode was, at once, an effective short-term deployment of excess manpower from the standpoint
of the workers, the company, and the community, and a near-zero cost public relations program on a national basis for the firm. The severance pay and voluntary layoff options, although adding some workers to the unemployment roles, created and increased positive images of the company in the minds of many employees and community citizens. One could argue, given the economic circumstances, that both of the above strategies typify the concept of optimal joint utility. Finally, Kawasaki-Nebraska has tried to further limit employee layoffs by expanding the plant maintenance function and assigning a number of employees to work-sharing and housekeeping functions.
CONCLUSIONS
There is danger in trying to generalize from a single case study such as that of KawasakiNebraska, and we will avoid doing so. However, it is important to contemplate and speculate about particular findings. Difficulties in translating work-related rules from one culture to another may reside in cultural differences. The differences can, in a general sense, be stated as follows: Japan has, relatively speaking, a highly disciplined, closed, monoreligious, and homogeneous culture, while the United States has a heterogeneous, multireligious, nonconforming, and litigious society. The concept of “family” and “group” in Japan appears to be paramount, while the concepts of “self” and “self-fulfillment” seem to predominate in U.S. culture. The respective culture themes rest in, among other things, geographic size, richness of resources, and the relative need to depend on self-sacrifice and hard work to remain viable as a cultural and economic entity. In Japan, with its historical respect for hierarchical authority, its small geographic
size, and its relatively limited natural resources base, the virtues of social and workplace harmony reinforce the efficacy of mutual trust and obligation, which in turn lead to survival. This has led to a considerably limited consciousness of “rights.” In the United States, on the other hand, with its diversified scope, both physical and societal, the emphasis is on people’s individuality and their constitutionally and statutorily guaranteed rights to quarrel about and pursue those rights and equities. Relative to this latter point, it is not surprising that KawasakiNebraska employees turned to the union for aid when they “perceived” that an earlier bestowed job perquisite - insurance coverage -was apparently being discontinued. It may be in the U.S. industrial worker’s nature to fear that what can be granted unilaterally can be removed in the same way; even without a union the insurance plan was seen as a part of the employment arrangement and therefore a “right,” Then, too, because the workers believed the merit-pay plan to be unfair for a variety of reasons, that system offended their sense of equity and led, as we have seen, to a renewed call for union representation. The historical practices of collective bargaining in the United States permit workers to argue that codified rights are protected rights and, thus, immune from management expediency. In spite of two union-organizing episodes, the balance of Kawasaki-Nebraska’s relationship with its workforce has been strong enough to prevent success by the union in its attempts to represent employees -at least to this point in time. A caution, however, seems important. When a foreign management tries to impose its own alien form of labor relations in the U.S. cultural setting, where manufacturing labor-management relations are adversarially oriented to a significant degree, major managerial mal-
functions, whether intentional or inadvertent, may activate the employees’ latent desires for representation and codification of rights and equities. Excluding the recent period of severe recession, job security as manifested by flexibility of staff movement permits broader job classes so that employees do a wider variety of tasks, thus increasing their own “human capital” value. This seems to be a relatively effective approach and was readily accepted by the workers. Buttressed by the teamwork concept of on-line quality control and “just-in-time” inventory control, the connection between product quality, wage improvement, and job security could be clearly perceived by the employees. When the overall concept of job security was further reinforced by the concerned attitude of Kawasaki-Nebraska management (as evidenced by “loaned-out” workers and severance pay offerings), employee loyalty was heightened. This latter point may be characterized as the “concern for family” approach to worker well-being. It may be suggested that the most significant problem faced by KawasakiNebraska management (and probably by other foreign managements as well) was to achieve credibility and worker acceptance of its approach to employee-employer relations before its inexperience in the U.S. cultural setting aroused unionizing attempts. This is not to suggest a posture either for or against the unionization of any firm or plant, but simply to suggest that in certain environments management may not have much time to make its case. Consequently, it would seem that cross-cultural transfer of different management approaches demands a very careful assessment of the local cultural context and detailed planning before the event. Finally, it may be argued that Kawasaki-Nebraska management was using a union-avoidance approach toward its
33
workers. However, union avoidance may take one of two general forms. One strategy is the direct union-suppression approach, while the other is an indirect union-substitution. The former management strategy is negative in character and manifests itself in hostility, low wages, absence of professional management, and litigiousness of management toward labor. The latter management strategy is positive and is characterized by, among other things, competitive wage and fringe benefit levels, such human support programs as training-communication-information networks, sharing of decision making, a complaint and grievance procedure, and an equitable wage and salary system that
SELECTED
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BIBLIOGRAPHY
For a useful discussion of the interaction of a firm’s labor-management relations system and international competitiveness see Study of U.S. Competitiveness: Study of Export Trade Policy as Mandated in Section 1110 of the Trade Agreements Act of 1979 (Bureau of International Labor Affairs, U.S. Dept. of Labor, July 1980). Several books provide insights into the concepts of lifetime employment, temporary employment, and the seniority-wage system: Tadashi Hanami’s Labor Relations in Japan Today (Kodansha International, 1979) and his Labour Law and Industrial Relations in Japan (Kluwer-Deventer-The Netherlands, 1979); and Chie Nakane’s Japanese Society (University of California Press-Berkeley, 1970). An excellent discussion of the “just-in-time” inventory system is contained in Richard J. Schonbergeis Japanese Manufacturing Techniques: Nine Hidden Lessons in Simplicity (The Free Press, 1982). For a pertinent discussion of union avoidance see Thomas Kochan’s Collective Bargaining
rewards both merit and seniority. The analysis of the Kawasaki-Nebraska case appears to support the use of the indirect union-substitution strategy by foreign managements that want
to avoid
unionization.
This study ends as of 1981, however, and does not discuss several unfair labor practice charges filed by the United Automobile Workers that are in various stages of litigation. The alleged unfair practices include termination of employment for union activity and threats to close the plant to avoid
unionization.
From this perspective,
of course, the union would probably argue that Kawasaki-Nebraska was engaged in direct union suppression.
and Industrial Relations: From Theory to Policy and Practice (Richard D. Irwin, Inc, 1980).
ACKNOWLEDGMENTS
Appreciation is here expressed to the managers and employees of Kawasaki Motors Corporation of Lincoln, Nebraska for allowing observation of the production activities and examination of memoranda. Special thanks are due to Robert Summers, former personnel director, for extended discussions and clarifications. An earlier version of this paper was given at the Sixth World Congress, International Industrial Relations Association in Kyoto, Japan in March, 1983.
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