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More and more companies are phasing out middle-management ranks in the Japanese corporate hierarchy such as section chief and chief clerk as they revamp their organization. Approaches differ, but the basic ends are the same from company to company. They include flattening out the traditional pyramidal structure, making management leaner, speeding up decision-making, and improving productivity.
Shedding Tiers, Titles
In August 1996, a major glassmaker halved the number of grades in its hierarchy to three: department chief, group leader, and group member. Only the rank of department chief was retained from the old structure. Jettisoned were the categories of deputy department chief, section chief, acting section chief, chief clerk, and regular employee. Of 360 management staff below the rank of department chief, 120 became group leaders and the remaining 240 lost their titles.
As part of a similar organizational overhaul in July of this year, a major steelmaker will phase out the middle two tiers from its current four-tier hierarchy consisting of the grades of department chief, section chief, chief clerk, and regular employee. The plan calls for merging and abolishing of departments and for selecting some of the current section chiefs and chief clerks to take charge of "groups" that are to take the place of their previous fiefdoms. The result will be an effective cull of titles: Of a former 4,800-strong management corps of 300 department chiefs, 2,000 section chiefs, and 2,500 chief clerks, only around 180 department chiefs and about 500 group leaders will remain in the management tier after the reform.
Also planning to flatten its organization in July is an electrical power company in the Tokyo area. It will introduce the "group system," wherein employees are broken up into teams focused on particular functions, at its headquarters and 13 branch offices. It will also revamp its current five-tier hierarchy so that the three middle ranks are scrapped along with all the sections. They will be replaced by a system of groups with three ranks: department chief, group manager, and member.
These trends are evidenced by Management and Coordination Agency data. Looking at its index expressing the total number of management staff nationwide, set at 100 for 1989, we notice that it peaked in 1992 at 110 and had fallen back to 100 in 1995. But if the number of specialist and technical staff is quantified in the same way, we find that their index rose continuously to 120 in 1995.
Top Priority: Lean Organization
At the same time it has become increasing important for them to speed up policy- and decision-making in the face of intensifying global competition. With the pyramid structure, in which approvals have to be sought up through the hierarchy of chief clerks, section chiefs, and department chiefs, it is hard for companies to respond to a business environment that changes constantly.
Along with these changes in organizational structure and middle management, companies are also trying to revise the traditional seniority-based promotion system and raise productivity by shifting fully to a system based on merit. The above-mentioned steelmaker is following a policy of disregarding number of years of service when appointing its group leaders, and of making merit the only criterion--an approach that could lead to some former chief clerks leapfrogging ahead of section chiefs. In a similar vein, the electricity company stresses that upcoming organizational and management changes are not aimed at simply cutting the number of management staff, but at fostering specialist expertise and making the company thoroughly professional.
It is clear that the weeding-out of middle management in corporate overhauls can have a range of goals, and is likely to gain momentum in the future.
Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.