The Positioning of HR within an Organization

U.S and Japanese companies have taken different approaches to HRM. In general, Japanese companies have been relatively organization-oriented, meaning that there is low turnover due to lifetime employment, extensive in-house training, and internal considerations such as equity and seniority on wages and allocation. By contrast, in the United States, employment practices tend to be more market-oriented with shorter job durations and pay and allocation based external criteria and individual performance and contribution (Jacoby 2005).

These differences between U.S and Japanese companies are reflected in their positioning of HR department within their organizations. The headquarters HR department in a Japanese company occupies a central position within the organization because its decision-making role includes the rotation of managers around the company and the identification of employees for senior positions. The HR function is centralized to the headquarters HR department. On the company board, the HR executive representing employee concerns can greatly influence corporate strategic decision-making. Typically in Japan, the candidates considered for top executive positions have had some job experiences in the HR department. In the United States, on the other hand, the market emphasis has meant a shift of HRM decision from central HR to business units or line managers (Jacoby 2005). Senior HR executive traditionally stood toward the bottom of the managerial hierarchy and had less influence on business decisions and strategies. Even today, according to a survey , U.S. HR leaders in global companies believe that they have less influence within their executive teams than their European counterparts.

The disparity of this HR positioning between U.S. and Japan could affect the relationship between U.S. headquarters and Japanese affiliates. For instance, when an American company expands its business to a Japanese market, the firm employs a local HR manager to deal with local HR practices. If the local HR manager has experience working in a headquarters HR department in a Japanese company, the manager may expect high level of discretion and decision-making in executing its tasks from the U.S. headquarters.