Selection and Promotion of Managers in Japanese Companies: Present and Future Perspectives

Given the long-term employment and recruitment of new school graduates, firms must maintain the motivation of the greatest number of staff as long as possible. Under the long-term employment system, where it is difficult for firms to urge them to leave or hope that they would leave voluntarily, if they are sorted into elite and non-elite as a result of competition at an early stage of their career, losers are likely to stay for a long period, with reduced motivation. To avoid that, firms select managers through tenure-based management of promotion—wherein a promotion gap among the staff on the same tenure cohort (called nenji) expands gradually over a long time. In addition, personnel department has a great influence in relocating their staff, so that they can transfer to different departments or functions within the firm and have a greater opportunity of promotion than staying in the same function for a long time. This also helps to maintain tenure-based management of promotion. However, it also causes that the staff with specialty is assigned to managerial positions, and on the contrary, the staff with managerial grades but with no managerial positions tend to be given the title as ‘specialists.’