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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'Lifetime' Employment at Matsushita

Matsushita was founded by Konosuke Matsushita (Konosuke) in 1918, as Matsushita Electric Housewares Manufacturing Works in Japan. From the beginning, Konosuke's belief about employees was different from other employers. Generally, employers considered it risky to share technical know-how with their employees as there was a possibility of them passing on the information to their competitors. However, Konosuke trusted his employees a lot. He believed that knowledgeable employees would perform better and therefore believed in sharing all information with them. After the Second World War, Matsushita expanded rapidly into different product segments, namely, consumer electronics products, industrial electronics products and components...

Human Resource Management System Reforms

In the late 1990s, Matsushita was forced to restructure its liberal human resource policies due to Japan's worst ever economic recession in the 1990s and the Asian currency crisis of 1998.

In 1998, the company introduced the Retirement Allowance Advanced Payment System under which the new recruits were given pay packages based on their preference. The new system was introduced because the attitude of young workers in Japan was changing and they preferred to change jobs for better opportunities.

The new system offered two options – Plan A and Plan B. Under Plan A, recruits received significantly higher salaries (more than 100,000 per annum than Plan B). However, these recruits had to forgo other benefits like stock sharing, housing loans, company accommodation etc. and did not get any amount on retirement or resignation.

Under Plan B, the recruits got lower salaries than in Plan A, but got additional benefits like company accommodation, stock options, free tickets to social events and more. In both the plans, employees had to forgo the retirement allowance (Refer Table I)...

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