Global and Local Resourcing 391 influence. This finding once again is consistent with our previous research on hybrid HRM systems - with a sense of balance between improving short-term effi- ciency, flexibility and competitiveness under the influence of globalization and market-driven economy on the one hand, and maintaining a long-term humanist management philosophy with an Asian emphasis on harmony, care and equality, and a community orientation, on the other. This pattern seems to be a logical outcome of the ongoing management transition in general in East Asia. Sources: Company websites, reports and interviews. Case study questions 1. What are the key changes in the area of employee resourcing at ITOCHU during the recent economic restructuring? 2. How would you evaluate the effectiveness of the new HR retention policy at ITOCHU? 3. What are the driving forces for ITOCHU to adopt these changes? Case study questions for further reflection 1. Imagine you are the HR manager at ITOCHU. What would be your proposed HR strategy to maintain the balance between traditional management philosophy and current market-oriented management practices? 2. Imagine you are the HR manager at ITOCHU. How do you introduce and develop the strategic role in the current HR management system? Further reading • Rowley, C. and Benson, J. (2002) 'Convergence and divergence in Asian HRM, California Management Review, 44(2): 90-109 This article provides an overview on similarity and difference of HR policy and practices among Asian countries. Rowley, C. and Warner, M. (2004) "The Asian financial crisis: the impact on human resource management', International Studies of Management and Organization, 34(1): 3-9. This article illustrates the impact of the Asian financial crisis on changes in HRM in Asia. It is useful for considering the current HR strategies used to cope with the economic crisis. • Warner, M. (2000) Introduction: The Asia-Pacific HRM model revisited', International Journal of Human Resource Management, 11(1): 171-182. (Continued) General Meeting of stockholders Board of Corporate Audton, Corporate Auditors Corporate Aud tors' Omice Beard of Directors President and C.E.O. Chief Financial Officer Directors, Audtors & Executive Officers Meeting Chief Compliance Officer Chief Information Officer Headquarters Management Committee Audit Division Secretariat Corporate Planning & Administration Division Amlae Administration Division Corporate Communications Division Chief Corporate Planning o'icer IT Planning Division Research & Policy Analysis Division ITOCHU DNA Project One Investor Relations Department Finance Division General Accounting Control Dision Business Accounting & Control Division Risk Management Division Chiel Administration Officer Human Resources Dision Legal Division General Affairs Division CSR & Compliance Division Textile Company Machinery Company Aerospace Electronics & Multimedia Company Energy, Metals & Minerals Company Chemicals, Forest Products & General Merchandise Company Food Company Financa, Realty, Insurance & Logisties Services Company Domesic Office Innovative Technology Business Development Omice Chief Operating Hicer, Division Companies Operations Corporate Development Office Healthcare Busness Department Chief Operating Oficer, Overseas Operations International Operations Division Overseas Once Chief Micer tar Kansai District Operation Figure 11.1 Organizational structure of ITOCHU Corporation Global and Local Resourcing 389 390 IHRM Policies and Practices (Continued) CIS HR retention EUROPE NORTH AMERICA JAPAN MIDDLE EASTO CHINA ASIA O AFRICA LATIN AMERICA OCEANIA Figure 11.2 ITOCHU: global network In recent years, HR retention policies have been re-designed through job alloca- tion/design and training and development. In ITOCHU, each department was in charge of job allocation and line managers made decisions on tasks and employ- ees' responsibility. The more recent focus has been on specialization rather than job rotation and multi-tasking. Each department had HR personnel who had facilitat- ing roles to support the line managers with implementing issues related to HRM. The HR department at the top level of the company was only in charge of HR planning and other general issues, and not responsible for detailed job allocation. In addition, in order to attract capable young people to join the organization and promote long-term commitment, ITOCHU changed its job ranking system from nine grades into six grades. The company also made it possible for young talented people to be placed on a fast track for early promotion. The new systems of job design and promotion were based on performance assessment rather than seniority. Furthermore, training and development become the key area of HRM policy and practice for devel- oping people's skills and in return motivating higher commitment to the organization. The most common practices include orientation training, formal and informal OJT and Off-JT. In ITOCHU, orientation training and formal OJT were compulsory with the former lasting three weeks and the latter lasting a year. Informal OJT was encour- aged through team-based discussion and peer assistance. Specialist and managerial training programmes normally took Off-IT forms that enabled the core technicians and managerial staff to enrol in professional training centres or institutions. Overseas training was also common and the company sent 30-40 young people to the US for three to four months' training every year. Recruitment Change in the HRM area of employee-resourcing and in particular recruitment is widespread. Generally speaking, two types of recruitment belong to the traditional system, namely: (a) high school and vocational school graduate recruitment, and (b) college and university graduate recruitment. In recent years, new types of recruitment have emerged as part HR policies to deal with unemployment, the ageing population and organizations' needs for special skills and experiences under circurfistances of global competition and economic recession. These new types of recruitment are: (c) mid-career professional recruitment, (d) late-career (semi-retiree) recruitment, and (e) foreign professional recruitment for special positions. In recent years, government policy set out to promote greater mobility of employees. Two important schemes have been introduced, namely the 'shukko scheme (external mobility) and the 'haken' scheme (internal mobility). This step has had its impacts on companies such as ITOCHU. Use of the schemes has gradually reduced the number of employees at the headquarters level. A number of people have been relocated into subsidiaries and more capable and experi- enced people have been recruited externally through the mid-career professional recruitment system. Discussion The change in the macro-economic environment, in particular the global financial crisis of 2008, has been an important influence on the kind of HRM changes adopted in Japanese companies. As a leading MNC in Japan, ITOCHU has adopted some new practices alongside preserving conventional good practices. The case shows that substantial changes can occur in the areas of recruitment, job allocation, labour mobility as well as training and development. We see an increasing combination of East and West concepts of people management being adopted in such leading MNCs. In fact, the management philosophy has been adjusted to consider the 'traditional dimensions of the well-being of stakeholders and company, as well as the new dimensions of market competition and foreign (Continued) Global and Local Resourcing 387 388 THRM Policies and Practices (Continued) General Meeting of Sockholders Board of Corporate Audton, Corporate Auctors Corporate Auditors' Office Board of Directors President and CEO Chiel Francial Officer CFO Office Directors, Auditors & Executive Officers Meeting Chief Compliance Ollicer Chief Information Officer Headquarters Management Committee Audit Division Secretariat evolved and grown into a 'sogo shosha' (general trading company), engaging in domestic trading, import/export and overseas trading of various products, such as textiles, machinery, information and communications-related products, metals, products related to oil and other energy sources, general merchandise, chemicals, and provisions and food. In addition, ITOCHU has made multi-faceted investments in insurance, finance, construction, real estate trading and ware- housing, as well as operations and businesses incidental or related to those fields (www.itochu.co.jp/). The total number of employees at the Tokyo headquarters was reduced from over 5,000 people in the early 2000s to the current level of 4,222 (excluding local employees working at overseas branches, offices and other subsidiaries), with a more robust organizational structure (see Figure 11.1) and an extensive global network (see Figure 11.2). The combined sales of Mitsubishi, Mitsui, ITOCHU, Sumitomo, Marubeni and Nissho lwai, Japan's top six 'sogo sosha', have for some years been nearly equivalent to the combined GDP of all of the countries in South America, and our case example is the third largest of these companies. Under a former mid-term management plan 'Frontier-2006', ITOCHU obtained its objective of becoming a highly profitable corporate group achieving over ¥100 billion in consolidated net income in a steady and sustainable manner. ITOCHU then moved forward with the implementation of its new mid-term man- agement plan, 'Frontier 2008', under which the management hope to adopt an even more aggressive management policy striving to enhance corporate value on the world stage, in order to become a global enterprise that is 'highly attractive to all stakeholders'. -Corporate Platining 4 Administration Division Aria Administration Division Corporate Communications Division Chief Corporate Planning oicer IT Planning Division Research & Policy Analysis Duison ITOCHU DNA Project Office Investor Relations Department Finance Division General Accounting Canto Disc Chiel Administration Olio Business Accounting & Control Division Risk Management D Mision Human Resource Division Legal Dslom General Affairs Division CSR & Compliance Division Textile Company Machinery Company Aerospace, Electronics & Multimedia Company Energy, Metals & Minerals Company Chemicals, Forest Products & General Merchandise Company Food Company Finance, Realty, Insurance & Legista Services Company Domestic Office Innovative Technology Business Development Moe As the President and CEO, Eizo Kobayashi pointed out: In the fiscal year ended March 2008, the Company posted consolidated net income of Y218.6 billion-achieving record earnings for the fourth consecutive year. Without a doubt natural resource price hikes contributed to that favour- able performance, but in addition, our growth strategies are steadily bearing fruit Our medium-term management plan, Frontier* 2008 – Enhancing Corporate Value on the World Stage, will be ending in the fiscal year ending March 2009. We will be stepping up the pace of aggressive corporate man- agement - based on measures for maintaining a global perspective, creating new initiatives, and enhancing human resources - to dramatically increase earnings (Continued) Chief Operating Oficer, Division Companies Operations Corporate Dewelopment Office Healthcare Buse Department Chief Operating Officer Overseas Operations International Operations Division Overscas Oitice Chief Micer tar Ransal District Operation Figure 11.1 Organizational structure of ITOCHU Corporation Global and Local Resourcing 385 386 IHRM Policies and Practices 6 Summary and conclusions achievement of business outcomes, particularly given the continuing demand for high quality work outcomes and better skills and knowledge. Discussion questions 1. With the increasing economic uncertainty and problems of the 2008 global financial crisis, enterprises should focus their HR policy solely on downsizing and retrenchment, rather than other activities such as recruitment and reten- tion. Comment on this statement. 2. How do we identify the key factors influencing enterprises' adoption or adjust- ment of specific HR policies and practices? 3. Recruitment and selection practices in these four Asian economies seem to be different. What are the reasons for these differences? 4. What is the purpose of enterprises adopting more advanced training and devel- opment policies and practices? 5. What is the role of the government in labour market development at the macro- level and in reforming HR policy and practices at the enterprise level? This chapter has provided an overview of key elements related to employee-resourc- ing in terms of recruitment and retention. Through theoretical and practical insights derived from four Asian economies, namely, Japan, Taiwan, China and Vietnam, we have endeavoured to develop knowledge and understanding of the key factors deter- mining the outcomes of HR policies and practices. Regarding the factors that influence enterprises to adopt specific HR practices, the findings in the research literature indi- cate that government policy on economic reform has had a fundamental influence on these changes (see Wamer, 2013a). Under the reform agenda, management at enterprise level adapted their decisions and practices to meet the more competitive external challenges. The subsequent strate- gic change, including the internal adjustment of HR practices, has maintained a clear purpose which is to improve the efficiency and level of productivity of these businesses. The study has several implications for both HRM theory and practice when facing the challenges of globalization, greater market competition and enhanced economic reform and transition. First, the development of people management' is a process of policy integration involving a number of factors, including political-economic changes and enterprise management reform. In fact, a combination of the political economy approach and strategic choice approach can be used to analyse the phenomenon of people manage- ment reform in the context of economic transition and globalization, and these two approaches can be applied in ways that are inclusive rather than exclusive areas of policy and practice. Second, the implications for policy-makers are also significant. The government's purposes in economic reform in general and people management reform in particu- lar are two-fold: on the one hand, economic reform might lead to the improvement of economic growth and living standards; on the other hand, if people benefit from the reform then they may more strongly support economic reform policy and, in return, social stability can be maintained and the government sustains its 'legitimacy" to rule society. “Third, the implications for enterprise management are also clear. Under the current process of globalization and market competition, now accompanied by global finan- cial crises and economic uncertainty, individual enterprises have to find ways to sur- vive and prosper. Adequate HR policies and practices are a crucial part of business survival strategies. 'Downsizing and retrenchment' could well be the dominant dimension for HR policy when enterprises experience an economic downturn, However, a balanced approach is necessary not only with the focus on the short- but also vis-à-vis the long-term sustainability of enterprises. Recruitment and retention are important - given that finding, recruiting and selecting the right people with adequate skills may reduce costs and improve efficiency. Moreover, job design and training and development can be crucial for the successful CASE STUDY ITOCHU - A Japanese firm in the era of retrenchment and reform The Japanese economy has been experiencing severe problems since the early 1990s, when its long-term national economic recession began to emerge. Enterprises have been under tremendous pressure since then to restructure their organizations and reform their people management systems. As one of the leading Japanese MNCS, ITOCHU may be seen as a leader in this era of Japanese reform and has adopted many new ways of people management into the company's routine HR practices. The areas of recruitment and retention, for instance, have been crucial aspects for developing innovative management practices and ensuring business survival. The following case is used as an example, showing what changes have been made in adopting new methods, systems and techniques of people management and in organizational restructuring term outcome Company background The history of ITOCHU Corporation dates back to 1858 when the founder Chubei Itoch commenced linen-trading operations. Since then, ITOCHU has
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