## (Changes in Company Institutional Systems)

The wage curve in 2004 fell to 70% of the peak attained in 1990 (Figure 54). In terms of wage systems, which have been revised in the past three years, many of the companies responded that they "extended the portion of the wages which reflect performance and results". While companies are not able to commit to raising wages, it appears that they changed the wage system to reflect employee performance, results and ability, so that employees understand the wage mechanism and are satisfied with their work.

Looking at working hours, the proportion of employees with less than 35-hour per week is on an upward trend, but proportion of employees reporting 60 or more hours is also increasing. Thus, there is a diversification of working hours among employees. There have also been notable changes in the proportion of the firms that have switched to a variable working hours system over the past dozen years.

On the personnel development side, though the ratio of employee education and training expenses to labour cost remains low compared to the 1990 level, companies demonstrate a positive attitudes toward personnel development. However, there is now a tendency to shift responsibility from the company to the individual.

For promotion, the average age by job grade is rising for all grades, reflecting the fact that, as a result of the changing company age structure due to an increasing number of middle-aged and older persons, the age at which promotion to management positions by different generations, looking at the proportion of university graduates in management positions, the generations they are, the lower the rate of occupying management positions, even among the same age class (Figure 55). A number of the firms are introducing professional positions, which is one way of addressing the shortage of management positions.

## (Performance Appraisal)

Whether employees accept new systems and get motivated to work depends on the successful implementation of an effective performance appraisal system. However, many companies feel that there are some problems with their system. Some of the challenges and problems cited by companies include, "it is difficult to coordinate evaluation standards between departments", "evaluators are not well trained", "employees do not accept the evaluation result", and "evaluation will reduce employee's motivation to work". To deal with such issues, many companies answered that they "developed an evaluation manual" and are "taking some measures for those with a low evaluation result" (Figure 56). There was a high rate of responses for "the employees do not accept the evaluation result". One possible explanation is that the companies do not clearly present their expectations of employees in terms of ability and achievements. For the successful operation of a performance evaluation system, it is essential for both the company and workers to provide information on their requirements/needs and capabilities.

In terms of measures to raise employee motivation, a number of companies said they emphasize performance-based wage and promotion, offer steady employment and wages, apply the goal management approach, and empower their workers. Though emphasizing all these measures does not necessarily raise employees' level of satisfaction with their work, the company's efforts to increase employee motivation to work can lead to greater job satisfaction.