The purpose of this paper is to critically evaluate the impact of performance-based HRM practices on employees and firm performance in the context of Japanese organizations. This paper has critically evaluated the research works conducted by Tomoki Sekiguchi in 2013 to recommend the firms and further research on how the performance-based HRM practice impacts firm performance. This paper accomplished the critical evaluation and has found out that there is no significant positive impact of performance-based HRM practice on firm performance. Rather, the research has found that performance-based HRM practice has a significant positive impact on employee well-being and morale.
This researcher is significant for both the researcher and the firms of Japans and the future researcher in this study gain knowledge and understanding of a mini-research work. The future researcher and the firms will get suggestions from the finding of this study. The conclusion of this research is although it is found that the performance-based HRM practice in Japan has no significant positive impact on firm performance, further researchers should conduct wider research on the topic to come to conclusion.
Table of Contents
The Author (s)
2.0 Critical Literature Review.
2.1 Emergence of performance-based HRM practices in Japan.
2.2 Diffusion of performance-based HRM practices.
2.3 Institutionalization and bandwagon effects.
2.4 Strategic responses and decoupling of practices.
2.5 Theoretical integration.
4.0 Research Design.
4.1 Research philosophy and research approach.
4.2 Data sources and data collection methods.
4.3 Sampling method.
4.4 Ethics clearance.
4.5 Data analysis.
7.0 Limitation of this research.
8.0 Recommendation for further researcher
10.1 Appendix A: Popularity of performance-based HRM practice.
10.2 Appendix B: A proposed theoretical framework. 1
Strategic Human Resource Management (SHRM) is a major research field in the current business world. This is because it plays a significant role in employee management and HRM practices in the workplace and to gain sustainable competitive advantages and better firm performance. On the other hand, a number of theories developed over time (including management fashion theory and institutional theory) have characterized the external environment surrounding businesses that affect the organizational behaviors and subsequent outcome. The case of performance-based HRM practice in Japan has focused on the relationship between SHRM, management fashion, and institutionalization. Many researchers believe that as Japan is a collectivistic and homogeneous society, the institutional context may be suitable in this society.
In addition, a majority of Japanese organizations are interconnected with each other, specific management practices may suitable in this situation. Then, as Japan is experiencing significant institutional and economic changes, it is essential to study the dynamic interplay between institutional and economic factors that affect the businesses’ management practices and subsequent firm performance.
This report critically evaluates the emergence and diffusion of performance-based HRM practices in the context of Japanese firms. The main purpose of this report is to review the literature and theoretical insights regarding HRM practices and their impacts on business performance. This paper mainly focuses on institutionalization, management fashion, and SHRM practices. This paper has, firstly, evaluated how performance-based HRM practices emerge as the management fashion in the context of Japanese firms. Then, this paper focuses on what are the reasons for becoming popularity of performance-based HRM in larger organizations in Japan. Next, this paper focuses on the real relationship between performance-based HRM practices and business performance. Finally, this paper develops a theoretical framework by integrating management fashions, institutionalization, and SHRM, and provides recommendations for the further researcher.
2.0 Critical Literature Review
2.1 Emergence of performance-based HRM practices in Japan
Performance-based HRM practices emerged in the Japanese firms during 1990 when Japan faced a long-term recession period with its bubble economy collapse (Sekiguchi 2006). Performance-based HRM practice has been effective in comparison to traditional HRM approach in a) strengthening staff grades and compensation practices and weakening seniority structure; b) reducing wage costs, and c) precise and strict assessment of every individual staff performance (Tatsumichi and Morishima 2007).
However, emerging performance-based HRM practices in Japanese firms took time after the collapse of its bubble economy. This is because the majority of Japanese firms had adapted the annual salary system before emerging the performance-based system, particularly for the managerial staff (Asakawa, Kayano and Machida 1993). In addition, the ability-based or merit-based HRM practices was often a new concept for Japanese firm which might replace seniority-oriented and traditional Japanese HRM practices. Then, many Japanese firms have considered the annual salary system as an element of modern performance-based HRM practice, which has been decreasing the popularity of ability-based and merit-based HRM practices…………….