Human Resource Management System Reforms at Matsushita


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Case Details:

Case Code : HROB028
Case Length : 15 Pages
Period : 2001
Pub Date : 2003
Teaching Note :Not Available
Organization : Varied
Industry : Consumer Electronics
Countries : Japan

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The collapse of lifelong employment in the world's largest consumer electronics manufacturer shows the company is hell-bent on surviving cut-throat global competition by urging middle-aged employees to quit or polish up their skills."

- mdn.mainichi.co.jp1 (2001)

"We must be reborn as a 21st century-style Matsushita. We have a deep sense of crisis. Signs of hope for an early recovery aren't there."

- Tetsuya Kawakami, Director, Matsushita (www.canoe.ca, July 31, 2001)

Revising the 'Generous' Employment System

In July 2001, Kunio Nakamura (Nakamura), the President of the world's largest consumer electronics manufacturer, Matsushita Electric Industrial Company (Matsushita) of Japan, decided to put an end to the company's policy of 'lifetime employment,' which had been an important part of the Japanese management philosophy for decades. In September 2001, Matsushita introduced an early retirement plan and planned to implement it in five major companies2 of the Matsushita group.

This news shocked the Japanese business world, as Matsushita was well known for its age-old lifetime employment policy. The drastic changes announced by Nakamura were unheard of in the Japanese business community.

Moreover, the company also acknowledged that this was the first time it was asking its employees for an early retirement. Matsushita took pride in never resorting to lay-offs even during severe recessionary periods that followed the Second World War in Japan.

Analysts felt that Matsushita was forced to change its lifetime employment policy mainly because of a significant decline in its operating profits in the financial year ending March 31, 1999 and 2000 (Refer Exhibit I) coupled with problems such as global economic slowdown and Asian currency crisis. They felt that Matsushita had no other alternative to retain its position but to do away with its 'generous' employment policy of the company. Nakamura said, "If every employee over 50 left the company, including myself, Matsushita would revive instantly."

By December 2001, Matsushita received 10,000 applications from its employees at five companies.

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1] According to the article "10,000 workers at Matsushita opt for early retirement" dated December 7, 2001.

2] The five companies included Matsushita Communication Industrial Company, Matsushita Electronic Components Company, Matsushita Battery Industrial Company and Matsushita Industrial Equipment Company.

 

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