Employee Loyalty at the Workplace: The Impact of Japanese Style of Human Resource Management

International Journal of Applied HRM (ISSN: 1742-2604) Volume 3 Issue 1

Hooi Lai Wan


In this era of globalization and liberalization, employees are becoming the competitive advantage for business. A business may manage with mediocre employees but competent employees can propel an average business to greater heights. Likewise, bad employees can cause flourishing business empires to collapse. In a tight labor market, keeping good employees and developing employee loyalty becomes increasingly important and a continuing challenge.

With the tight labor market, employers therefore need a strategy to retain their key experts and crucial skilled workers. As prospective employers continuously bid for top performers, management strategies must therefore give due consideration and sufficient resource allocation to keep employees motivated and satisfied. The idea is that the satisfied employee is less likely to pursue greener pastures. Thus, implementing desirable human resource management policies will have a positive effect on employee loyalty.

Japan obviously relies extensively on its human capital to fulfill its national economic objectives. The "Look East Policy" was developed to emulate Japanese style of management, especially human resource management. Japanese human resource management places great emphasis on the internal labor market to fill promotion opportunities, long-term development programs and job security, among others. All these are contributory factors for employee loyalty. For Malaysia to sustain economic growth, appropriate human resource management policies that promote employee loyalty are essential.

Continuous and systematic approach to training and development, recruitment policies that reduce job-hopping and ensure long-term employment, internal promotion practices with a little recognition given to seniority and the implementation of the productivity-linked wage system would create a more committed employee towards the company. As most of these elements are representative of Japanese style of human resource management which enhance employee loyalty and encourages long-term employment, the hypothesis for this study is employee loyalty would be higher in companies where elements of Japanese style of human resource management are present.

The main purpose of this study is to define and model the approach of developing employee loyalty through human resource management policies by identifying human resource management policies that augments employee loyalty and analyzing if Japanese style of human resource management does have a role in enhancing employee loyalty. For this research, the extent of Japanese style of human resource management introduced and adopted by the small and medium size manufacturing companies in Malaysia is first analyzed so as to segment the participating companies into three groups, depending on the extent of Japanese style of human resource management introduced in their management practices.

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