9 Japanese and American Workers

Japanese and American Workers: Two States of Mind

William Ouchi

In this essay from Theory Z, Ouchi not only contrasts different business practices but different cultures. The incentives that work so well for American workers fail to motivate and in fact discourage Asian employees.

1 Perhaps the most difficult aspect of the Japanese for Westerners to comprehend is the strong orientation to collective values, particularly a collective sense of responsibility. Let me illustrate with an anecdote about a visit to a new factory in Japan owned and operated by an American electronics company. The American company, a particularly creative firm, frequently attracts attention within the business community for its novel approaches to planning, organizational design, and management systems. As a consequence of this corporate style, the parent company determined to make a thorough study of Japanese workers and to design a plant that would combine the best of East and West. In their study they discovered that Japanese firms almost never make use of individual work incentives, such as piecework or even individual performance appraisal tied to salary increases. They concluded that rewarding individual achievement and individual ability is always a good thing.

2 In the final assembly area of their new plant long lines of young Japanese women wired together electronic producers on a piece-rate system: The more you wired, the more you got paid. About two months after opening, the head of foreladies approached the plant manager. “Honorable plant manager,” they said humbly as they bowed, “we are embarrassed to be so forward, but we must speak to you because all of the girls have threatened to quit work this Friday.” (To have this happen, of course, would be a great disaster for all concerned.) “Why,” they wanted to know, “can’t our plant have the same compensation system as other Japanese companies? When you hire a new girl, her starting wage should be fixed by her age. An eighteen-year-old should be paid more than a sixteen-year-old. Every year on her birthday, she should receive an automatic increase in pay. The idea that any one of us can be more productive than another must be wrong, because none of us in final assembly could make a thing unless all of the other people in the plant had done their jobs right first. To single one person out as being more productive is wrong and is also personally humiliating to us.” The company changed its compensation system to the Japanese model.

3 Another American company in Japan had installed a suggestion system much as we have in the Unite States. Individual workers were encouraged to place suggestions to improve productivity into special boxes. For an accepted idea the individual received a bonus amounting to some fraction of the productivity savings realized from his or her suggestion. After a period of six months, not a single suggestion had been submitted. The American managers were puzzled. They had heard many stories of the inventiveness, the commitment, and the loyalty of Japanese workers, yet not one suggestion to improve productivity had appeared.

4 The managers approached some of the workers and asked why the suggestion

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system had not been used. The answer: “No one can come up with a work improvement idea alone. We work together, and any ideas that one of us may have are actually developed by watching others and talking to others. If one of us was singled out for being responsible for such an idea, it would embarrass all of us.” The company changed to a group suggestion system, in which workers collectively submitted suggestions. Bonuses were paid to groups which would save bonus money until the end of the year for a party at a restaurant or, if there was enough money, for family vacations together. The suggestions and productivity improvements rained down on the plant.

5 One can interpret these examples in two quite different ways. Perhaps the Japanese commitment to collective values is an anachronism that does not fit with modern industrialism but brings economic success despite that collectivism. Collectivism seems to be inimical to the kind of maverick creativity exemplified in Benjamin Franklin, Thomas Edison, and John D. Rockefeller. Collectivism does not seem to provide the individual incentive to excel which has made a great success of American enterprise. Entirely apart from its economic effects, collectivism implies a loss of individuality, a loss of the freedom to be different, to hold fundamentally different values from others.

6 The second interpretation of the examples is that the Japanese collectivism is economically efficient. It causes people to work well together and to encourage one another to better efforts. Industrial life requires interdependence of one person on another. But a less obvious but far-reaching implication of the Japanese collectivism for economic performance has to do with accountability.

7 In the Japanese mind, collectivism is neither a corporate or individual goal to strive for nor a slogan to pursue. Rather, the nature of things operates so that nothing of consequence occurs as a result of individual effort. Everything important in life happens as a result of teamwork or collective effort. Therefore, to attempt to assign individual credit or blame to results is unfounded. A Japanese professor of accounting, a brilliant scholar trained at Carnegie-Mellon University who teaches now in Tokyo, remarked that the status of accounting systems in Japanese industry is primitive compared to those in the United States. Profit centers, transfer prices, and computerized information systems are barely known even in the largest Japanese companies, whereas they are a commonplace in even small United States organization. Though not at all surprised at the difference in accounting systems, I was not at all sure that the Japanese were primitive. In fact, I thought their system a good deal more efficient than ours.

8 Most American companies have basically two accounting systems. One system summarizes the overall financial state to inform stock-holders, bankers, and other outsiders. That system is not of interest here. The other system, called the managerial or cost accounting system, exists for an entirely different reason. It measures in detail all of the particulars of transactions between departments, divisions, and key individuals in the organization, for the purpose of untangling the interdependencies between people. When, for example, two departments share one truck for deliveries, the cost accounting system charges each department for part of the cost of

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maintaining the truck and driver, so that at the end of the year, the performance of each department can be individually assessed, and the better department’s manager can receive a larger raise. Of course, all of this information processing costs money, and furthermore may lead to arguments between the departments over whether the costs charged to each are fair.

9 In a Japanese company a short-run assessment of individual performance is not wanted, so the company can save the considerable expense of collecting and processing all of that information. Companies still keep track of which department uses a truck how often and for what purpose, but like-minded people can interpret some simple numbers for themselves and adjust their behavior accordingly. Those insisting upon clear and precise measurement for the purpose of advancing individual interests must have an elaborate information system. Industrial life, however, is essentially integrated and interdependent. No one builds an automobile alone, no one carries through a banking transaction alone. In a sense the Japanese value of collectivism fits naturally into an industrial setting, whereas the Western individualism provides constant conflicts. The image that comes to mind is of Chaplin’s silent film Modern Times in which the apparently insignificant hero played by Chaplin successfully fights against the unfeeling machinery of industry. Modern industrial life can be aggravating, even hostile, or natural: All depends on the fit between our culture and our technology.

10 The shinkansen or “bullet train” speeds across the rural areas of Japan giving a quick view of cluster after cluster of farmhouses surrounded by rice paddies. This particular pattern did not develop purely by chance, but as a consequence of the technology peculiar to the growing of rice, the staple of the Japanese diet. The growing of rice requires construction and maintenance of an irrigation system, something that takes many hands to build. More importantly, the planting and harvesting of rice can only be done efficiently with the cooperation of twenty or more people. The “bottom line” is that a single family working alone cannot produce enough rice to survive, but a dozen families working together can produce a surplus. Thus the Japanese have had to develop the capacity to work together in harmony, no matter what the forces of disagreement or social disintegration, in order to survive. 11 Japan is a nation built entirely on the tips of giant, suboceanic volcanoes. Little of the land is flat and suitable for agriculture. Terraced hillsides make use of every available square foot of arable land. Small homes built very close together further conserve the land. Japan also suffers from natural disasters such as earthquakes and hurricanes. Traditionally homes are made of light construction materials, so a house falling down during a disaster will not crush its occupants and also could be quickly and inexpensively rebuilt. During the feudal period until the Meiji restoration of 1868, each feudal lord sought to restrain his subjects from moving from one village to the next for fear that a neighboring lord might amass enough peasants with which to produce a large agricultural surplus, hire an army and pose a threat. Apparently bridges were not commonly built across rivers and streams until the late nineteenth century, since bridges increased mobility between villages.

12 Taken all together, this characteristic style of living paints the picture of a nation of

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people who are homogeneous with respect to race, history, language, religion, and culture. For centuries and generations these people have lived in the same village next door to the same neighbors. Living in close proximity and in dwellings which gave very little privacy, the Japanese survived through their capacity to work together in harmony. In this situation, it was inevitable that the one most central social value which emerged, the one value without which the society could not continue, was that an individual does not matter.

13 To the Western soul this is a chilling picture of society. Subordinating individual tastes to the harmony of the group and knowing that individual needs can never take precedence over the interests of all is repellent to the Western citizen. But a frequent theme of Western philosophers and sociologists is that individual freedom exists only when people willingly subordinate their self-interests to the social interest. A society composed entirely of self-interested individuals is a society in which each person is at war with the other, a society which has no freedom. This issue, constantly at the heart of understanding society, comes up in every century, and in every society, whether the writer be Plato, Hobbes, or B. F. Skinner. The question of understanding which contemporary institutions lie at the heart of the conflict between automatism and totalitarianism remains. In some ages, the kinship group, the central social institution, mediated between these opposing forces to preserve the balance in which freedom was realized; in other times the church or the government was most critical. Perhaps our present age puts the work organization as the central institution.

14 In order to complete the comparison of Japanese and American living situations, consider a flight over the United States. Looking out of the window high over the state of Kansas, we see a pattern of a single farmhouse surrounded by fields. In the early 1800s in the state of Kansas there were no automobiles. Your nearest neighbor was perhaps two miles distant; the winters were long, and the snow was deep. Inevitably, the central social values were self-reliance and independence. Those were the realities of that place and age that children had to learn to value.

15 The key to the industrial revolution was discovering that nonhuman forms of energy substituted for human forms could increase the wealth of a nation beyond anyone’s wildest dreams. But there was a catch. To realize this great wealth, non-human energy needed huge complexes called factories with hundreds, even thousands of workers collected into one factory. Moreover, several factories in one central place made the generation of energy more efficient. Almost overnight, the Western world was transformed from a rural and agricultural country to an urban and industrial state. Our technological advance seems to no longer fit our social structure: In a sense, the Japanese can better cope with modern industrialism. While Americans still busily protect our rather extreme form of individualism, the Japanese hold their individualism in check and emphasize cooperation.

Understanding Meaning

1. What are the essential differences between American and Japanese workers

according to Ouchi?

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2. What historical forces have shaped the American and Japanese attitudes toward

self-identity and community?

3. When you think of success, do you think of individuals or groups? Is it natural for

most Americans to think of successful men and women rather than institutions or corporations? Explain your answer.

4. Why do the “primitive” accounting methods used by Japanese corporations seem

to work so well?

5. Critical Thinking: Ouchi states that Western individualism creates many conflicts

in an industrialized society. Discuss whether the American insistence on individuality and resistance to conformity causes needless social and psychological stress. Would Americans lose a sense of themselves if they identified with a corporation or institution?

Evaluating Strategy

1. How effective is Ouchi’s analogy of Japanese and American farms in highlighting cultural differences?

2. How does Ouchi organize his comparison? What devices does he use?

3. Other Models: Where does Ouchi use narration and cause and effect to develop his comparison?

Appreciating Language

1. What words does Ouchi use to describe Japanese and American cultures, values,

and attitudes? Is his language neutral, or does it have an implied bias?

2. Ouchi holds a doctoral degree and is accustomed to addressing scholars and

executives. What does his word choice and level of diction reveal about the readers he hoped to reach in this essay?

Writing Suggestions

1. Write a short essay about your own sense of individuality and your career goals. How much personal expression do you expect or desire in your work?

2. Collaborative Writing: After reading Ouchi’s essay, discuss the issue of individual success with a group of students. Would Americans accept a more collective management system? Does the success of individual workers create conflict in the workplace? Have members reflect on their own job experiences. Have one member of the group take notes of the discussion and then draft a short paper outlining the views of the group.

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