American Business Machines Corporation (NABMC) resulted from a joint venture between Dayton, Ohio based National Office Machines (NOM) and Nippon Cash Machines (NCM) of Tokyo, Japan. The business combination offers NCM more products to offer and new managerial leadership enabling NABMC to compete against stronger multinational brands like IBM, National Cash Register, Unisys and Sweda Machines. 1 Module 4 – Case 4-5 National Office Machines—Motivating Japanese Salespeople: Straight Salary or Commission? Business combinations come with integration challenges.
Incompatible national cultures add complexity to the labor management issues that need to be addressed by NABMC: America presents a highly individualistic and low context culture where individualism and economics are highly valued. In contrast, the Japanese culture is collectivistic and high-context placing high value on collective effort, personal relationships and status. 2 These cultural conflicts – also illustrated in Table 1 in the Appendices, must be addressed as the Japanese market is increasingly competitive and NOM believes that NCM’s traditional sales system continues to negatively impact revenues.
When weighing up the feasibility of introducing a highly effective sales incentive program from the U. S. to boost sales, NABMC must deal with existing practices and employee expectations. Japanese employers traditionally offer their employees a straight salary along with guaranteed employment, benefit programs that include subsidized housing, household goods, commuting costs, medical and even vacations. Bonuses are based upon company performance with semi-annual “summer” and “winter” bonuses traditionally equivalent to 3-months salary (each) paid in June and December.
3 To the Japanese sales force who have only worked for NCM and have up to 21 years of seniority, commissions on sales with performance based incentives (including termination when sales quotas are continuously unfilled), not only seems irrelevant – but unnecessarily harsh. Individual financial incentives are not effective in motivating salespeople in Japan. A balance needs to be found and the U. S. partner’s sales force management must be localized. A 2009 article addressing incentive design by multinational companies (MNC) supports the position that they should avoid transplanting incentive schemes from the home country to another market.
Research should take place to measure the relationships between satisfaction, preference, and institutional framework. Sometimes this information gathering finds that the employees may be satisfied with the level of the reward even when it is very low or, as in the case of the traditional Japanese human resource model, that the need for the reward is already satisfied in a different way. 4 Module 4 – Case 4-5 National Office Machines—Motivating Japanese Salespeople: Straight Salary or Commission? 2
As seen in Table 2 in the Appendices, the primary means of motivation of Japanese sales representatives is encouraging their commitment to the firm, and clearly communicating the organization’s goals and values. Setting realistic and challenging goals reinforces the concept of team. (Anderson, 2006). These workers get more satisfaction from their feeling of being part of a strong group with shared values than they do from recognition of individual performance. By creating policies and rewards focused around the idea of “teamwork” and the overall success of the firm, NABMC can enforce traditional Japanese business values in a meaningful way.
While large commissioned portions of compensation would probably confuse and frustrate most Japanese sales representatives, non cash incentives like holidays, special vacations can complement the other fringe benefits already offered. Recognition systems like the American practices of “salesperson of the month” tend to embarrass and not motivate the group oriented Japanese. Treating the whole sales force to a special occasion such as a dinner works better than individual recognition in Japan. Still, a study done by the Japanese government on attitudes of youth around the world suggests that younger Japanese could be more receptive to U. S. incentive methods.
Other key results emerged when Japanese responses were compared with responses of similar- aged youths from other countries. The Japanese young people were less satisfied with their home life, school, and working situations and more passive in their attitudes toward social and political problems. Almost one- third of those employed said they were dissatisfied with their present jobs primarily because of low income and short vacations. (Cateora, 2009. Page 670) To balance the agendas of the older worker versus the younger one, Gunkel suggests surveying stakeholders to identify what matters to them.
A cafeteria plan of incentives can then be developed. “A standardization of compensation practices for a MNC through country-specific cafeteria systems of rewards is possible once the general reward preferences of the employees in each country are known. The questionnaire survey …provides a relatively simple method to examine the reward preferences of individuals in different international locations of an organization. This might help avoiding unintended effects and unnecessary costs of compensating employees. ” (Gunkel, Page 20) Given the complexity of the Japanese corporate sales cycle, the kind of motivation and