Reform of "Human Ties" Vital to Establishing Principles of Performance - Results of awareness surveys concerning personnel system reform present new roles for the human resources department -

Nomura Research Institute, Ltd. (NRI: Tokyo; Akihisa Fujinuma, President, CEO & COO) conducted a "Survey on personnel system reform processes" (response rate of 13.5%) for 1,000 major domestic listed companies (including some companies not listed on the market) in November 2004. NRI simultaneously conducted an Internet survey called "Questionnaire on company personnel systems" (number of response samples 1,000) for all directors and employees (hereafter referred to "employees") working in listed companies that have carried out personnel system reforms within the past two to five years.

The results clearly show that there is a large gap in understanding regarding the objectives of personnel system reform and their actual performance between the human resources department and the employees. From the viewpoint of employees, while the new personnel system has brought about positive effects in individual attitude toward work, problems have also arisen regarding human ties at the workplace. The steady implementation of careful efforts regarding "human ties" can be therefore said to be extremely important in order to bring success into the new personnel system.

In recent years, there have been reforms conducted at many companies in Japan with the aim of creating a performance-based personnel system. In these surveys, which targeted personnel reforms that took place two to five years ago, in response to a question concerning the objectives of the personnel system reforms, more than 90% of the responses stated, "To carry out appropriate distribution of resources based on performance." In addition, there were also many companies which answered, "To boost the morale of those employees with ambition" (76%), and "To increase company performance" (53%).

Given the high response rate to the above-mentioned three responses, it would seem that there was a joint recognition between employees and their human resources departments in these areas. However, there were other responses for which employee response rate exceeded that of the human resources department, including, "To simplify labor cost management" (35.6%), and "To conduct restructuring" (16.6%). Conversely, responses from the human resources department exceeded those of the employees by more than 20% in categories such as "To boost morale" and "To cultivate independent and self-motivated human resources" (Figure 1).

Looking at the above shows that there were many responses from the human resources department concurrent with the ideological objective of recent years in promoting a performance-based personnel system. On the other hand, the responses of the employees demonstrates a somewhat cooler view, tending towards restructuring and the reduction of labor costs.

Regarding the objectives of the personnel system reforms, 66.4% of the human resources departments were seen to be satisfied with the achievements, corresponding to 46.5% among employees, which shows a not insignificant gap in understanding with the human resources department (Figure 2). In the effects recognized by the people who had indicated that they were "satisfied" with the achievements of the personnel system reform, 75.9% of the human resources department and 40.6% of the employees had responded, "Treatment matched performance/contribution." This reveals a very noticeable gap between the human resources department and the employees. In contrast, responses from employees exceeded those from the human resources department in the following categories: "Became a challenge-oriented organization" (human resources department 17.2% < employees 25.6%), "Cultivated independent and self-motivated human resources" (26.4% < 31.0%), and "Work became more challenging" (14.9% < 16.1%) (Figure 3).

On the other hand, 65.2% of the employees who were not satisfied with the personnel system reforms responded, "Hard to feel acceptance towards evaluation." Even among those employees who were satisfied with the personnel system reforms, only 24.7% responded, "Acceptance towards evaluation improved." It is clear that the systemic reforms of the evaluation scheme is the biggest issue for employees.

NRI took the results of the questionnaire and survey into consideration and determined that efforts regarding "human ties at the workplace," which would also include the operational stage of any personnel system, would be vital in first establishing and then making a success of a new personnel system. NRI proposes the following items as a detailed approach for resolving these problems, based on past consulting experiences: