### Section 2. Changes and characteristics of human resources management in Japanese businesses

In many cases, regular workers are described in the following elements 1) no fixed period in labour contract, 2) full-time scheduled working hours, 3) direct employment, 4) personal treatment according to service status and employment management system (wage system according to service period, raising of rank or conditions, deployment, human resources development, etc.), and 5) work places and duties are not limited, and have overwork. This is also closely related to the fact that Japanese businesses have responded to changes in labour demand caused by economic changes mainly through the adjustment of overtime working hours, deployment change and temporary transfer. However, there are various types of regular workers in recent years. Some companies manage human resources based on the external labour market that focus on hiring experienced human resources from outside the company, and others employ a group of regular workers whose duties, work places and working hours are limited by the human resources management (diversified regular workers).

Businesses in Japan made changes in management in conjunction with changes in outside environment, such as change of wage determinant factors and flattening of wage profile. Many companies in Japan focus on the internal labour market, and a high percentage of them work on employment management to increase labour productivity and work motivation compared to companies that focus on the external labour market.

Various people are able to choose ways to work with confidence thanks to the popularity of diversified regular employment. This is considered to contribute to securing human resources and improving productivity in businesses.

## (For regular employees, many companies apply human resources management that focus on the internal labour market)

According to Figure 30 that shows the policy concerning training and recruitment of business managers, about 70% of companies focus on internal training and promotion, while less than 10% focus on outsourcing experienced human resources. Many companies focus on internal training and promotion for human resources that are the core of regular employees and are considered to execute human resources management that focus on the internal labour market. By size of business, the percentage of companies that focus on outsourcing experienced human resources is higher in small-scale businesses.

## (Graduate recruitment that focuses on personal factors and personality)

When recruiting graduates, a high percentage of companies focus on points such as "communication ability," "independence," "challenging spirit," and "cooperativeness." On the other hand, the percentage of companies that focus on "academic knowledge" and "school records" are low. As a result that many companies focus on internal training, graduates are recruited based on personal factors and personality in expectation of development after employment rather than occupational abilities such as academic knowledge at the time of recruitment. This situation has not changed much compared to 10 years ago.

## (Increasing number of companies use "roles and duties" as wage determinant factors)

Figure 31 shows the wage system (multiple answers) used for the basic wage. The rate of introducing the wage system that reflects ability to execute duties (performance-based wage system) has been about 80% for employees other than those in managerial positions. While the rate of introducing the wage system that reflects the value of roles, responsibilities and duties (role- and duty-based wage system) is increasing, the wage system based on age and period of service is decreasing. In this way, ability to execute duties is used consistently by many companies as wage determinant factors. On the other hand, the number of companies that use the wage system based on age and period of service decreased and these companies have been replaced by an increased number of companies that use the wage system based on role and duties.

According to Figure 32, in recent years, the percentage of companies that have introduced a performance evaluation system is declining.