Case Study Seiko Instruments

Table of contents

Contents

Case summary: ...... 5

Company Profile ...... 7

Question No.1 ...... 8

Question-2 ...... 9

Question 3: ...... 10

Question no: 4 ...... 12

Question no: 5 ...... 13

Recommendations ...... 14

REFERENCES ...... 15

1 Case study: Seiko Instruments

The Seiko Group, established in 1937, consists of three distinct companies—Seiko Corporation, Seiko Instruments Inc (SII) and Seiko Epson Corporation. They operate independently but function as a cohesive unit in the design, production and marketing of the time pieces that established the Seiko name. The company has around 70 subsidiaries worldwide with over 10,000 employees. Through its global network, Seiko Corporation markets the timepieces produced by SII and Seiko Epson. In 1988 Seiko completed the world‘s first automated assembling system for multipurpose, small-lot production of watch movements.

The Scottish plant was founded in March 1990 and has 110 employees. The location was chosen because it is close to European markets, has a stable skilled workforce, and other Japanese companies had a successful experience in Scotland. The subsidiary manufactures thermal printers and watch components.

The organizational structure is constrained by British standards in some respects, in common with other Japanese companies operating in the UK.

HR strategy

The General Manager (GM), who is Scottish, has worked on the site for over 10 years and in all those years there have been only two visits by a personnel representative from Japan.

The main objectives of the visits were for the HQ to survey the Japanese employees working overseas. The corporation‘s stance is basically that in the overseas countries the personnel function should operate entirely autonomously. It‘s fairly bizarre to have identical policies and procedures in sites in as diverse locations as Japan, China, Thailand, Malaysia and the UK. Generally the company tries to treat its employees fairly well and it‘s left up to local personnel to follow local standards.

‗If it wasn‘t for Mr X [a Japanese senior manager] you wouldn‘t know you worked for a Japanese company. There isn‘t really anything Japanese about it at all. I say to people: you will probably find this company is not like your typical Japanese company.‘

Most personnel policies of the Scottish site are made locally; the site is given targets and a free range to achieve them ‗the Scottish way‘. The company‘s policy is to respect local ways—they try to adapt to local management practices 100 percent within the Scottish location. People management is designed locally, mainly by the General Manager. They have constructed a policy

2 manual and handbook containing mostly local practices. They are first written in draft, involving all the managers at this stage, agreed upon, and then formalized. Then they are placed on notice boards and employees are notified. Revisions are initiated as required by legislation, for example changes in working practices. The GM has spent some time working in the US (California) with Seiko and has introduced some Californian practices into the site.

Recruitment

All practices are driven from the Scottish site. In Japan they select school leavers for operators. Initially, the Japanese Manufacturing Manager had a preference for school leavers and teenagers and wanted the Scottish site to recruit them. He was involved in the recruitment of the first 90 employees who fulfilled this age criterion. When these 90 young recruits were assessed on, for example, how they behaved against their elders on site, they were considered unreliable and ‗unaccustomed to this kind of work‘. Absenteeism was a problem at this stage. He believed that ‗they had no work ethic at this age‘. The Personnel Manager at the time was the only personnel manager of a Japanese company in Livingston to say ‗I will not employ school leavers and teenagers‘. He thinks the policy of recruiting school leavers works in Japan because youngsters are more obedient and better educated.

Overseas training

Watch manufacturing has been in operation for over four years. A lot of initial training was done in Seiko‘s subsidiaries in Singapore and the far east; a lot of overseas trainers came over, and worked with the operators for about 3 months. The on-site practices have been refined over the years. Production supervisors go over to Japan every year to learn new processes. If the Scottish site had a disastrous manufacturing problem a Japanese would come over. Recently they have had an engineering design problem in the printers section and quality people came over from Japan. They stayed for three days to sort things out.

What has been brought from overseas is mainly knowledge. When the watch manufacturing was set up there were no processes in existence. Twenty four employees were sent over to Japan to learn how to operate the equipment. They came back and eventually increased the number of people in the area and developed their own systems.

The senior manufacturing engineer goes to Japan for training and looking at business opportunities, and to Singapore for transfer of production lines and further training. Generally, no one goes over to Japan to train. Although things are changing—they are becoming more

3 interested in what Scotland is doing with regard to technical processes. Scotland has taken Japanese ideas and is now running some of their machines more efficiently.

Training differences between Japan and Scotland

In Scotland the company encourages people to develop at operator level, both in-house and in colleges and other educational establishments, and finances their further education.

In Japan, because employees stay in the company a long time, they have large, established internal training and recognized formal qualifications. They have extensive support resources, for example engineering and technical support. Rank and file employees do not go to college or university, because they are not available to everyone at the company‘s expense, but sometimes managers do attend short courses in these establishments. However, the company will pay up to 50 percent of the cost of out-sourced English classes if employees wish to learn the language.

Team working

The subsidiary management has introduced the Japanese way of team working. The local managers know the Japanese practices such as total quality management and quality circles, and use them in a modified way. The management does not push Japanese quality initiatives; they are happy for the employees to apply the tools they prefer. Also, in Japan they run quality circles after working hours on a voluntary non-paid basis but the Scottish managers would not be able to implement them here because the operators would want to be paid overtime.

In addition, the managers believe that such practices as twice daily exercises in the office, customary in the Japanese sites, would not work here ‗because the company is not a school or army‘.

Consensual decision making

The GM‘s observation from working in Seiko plants in Japan is that Japanese style consensual decision making offers unsatisfactory compromises. He says decisions take more time to be made. Also, if junior Japanese managers are involved they will not speak their mind because they feel inhibited, for cultural and traditional reasons. In the Scottish site employees are more frank.

‗I would imagine that having worked here for a number of years our boss probably prefers what he may have initially interpreted as a fairly antagonistic discourse—it‘s a bit more stimulating and actually more things are aired and moved forward.‘

4 Pay and benefits

These are all decided locally. There is considerable competition for skilled local staff. Seiko in Livingston competes against the likes of Motorola and Sky for employees. Consequently their pay is competitive, with rewards for hard work. They also offer paternity leave, pensions, life assurance and sick pay.

Industrial relations

The Scottish site is not unionized, but the Japanese sites have company-based unions. Moreover, in Scotland there are grievance procedures in place to enable the employees to file claims against their boss, but such a system does not exist in the Japanese sites. Senior managers believe that the history of local trade unions still make the employees suspicious of management, even today. The management has to work harder to gain trust and get people to buy in and get them to come up with ideas and work on problems themselves.

In Scotland they make employees redundant if they have to. In Japan Seiko does not do this. The company offers jobs for life, and if need be transfers employees to holding divisions rather than make them redundant.

CASE STUDY QUESTIONS

1. Why has the parent company adopted an HRM strategy which would allow overseas subsidiaries to perform their personnel function autonomously?

2. In what respect is the Scottish subsidiary‘s recruitment policy different from its Japanese parent company, and why?

3. Why has the local management team decided not to implement some of the Japanese Parent

Company‘s practice in Scotland?

4. Why consensual decision making is not applicable in Scottish subsidiary?

5. What types of training facility Seiko group provides for its employees? What kinds of training difference are exists between Scottish subsidiaries and Japanese headquarter?

5 Case summary:

The Seiko Group is a Japanese company which was established in 1937, consists of three distinct companies—Seiko Corporation, Seiko Instruments Inc (SII) and Seiko Epson Corporation. Through its global network, Seiko Corporation markets the timepieces produced by SII and Seiko Epson. One interesting thing is that it has 70 subsidiaries which conduct business independently but their design, production and marketing is conducted uniformly. In March, 1990 Seiko established another new plant in Scotland for gaining some location advantage. Availability of skilled labor and better work experience in other Japanese firms motivated Seiko to establish the new plant in Scotland. In case of recruitment Seiko follow polycentric approach. That‘s why the general manager in the Scottish plant is Scottish. Generally the company tries to treat its employees fairly well and it‘s left up to local personnel to follow local standards. People management is designed locally, mainly by the General Manager. They have constructed a policy manual and handbook containing mostly local practices. In case of recruitment, all practices are driven from the Scottish site. Initially, the Japanese Manufacturing Manager had a preference for school leavers and teenagers and wanted the Scottish site to recruit them. But due to the absenteeism, low work morale and other problem the manager decided not to select the teenage people and select the employee as per local policy. In case of training, a lot of initial training was done in Seiko‘s subsidiaries in Singapore and the Far East; a lot of overseas trainers came over, and worked with the operators for about 3 months. Seiko provides training to production supervisors to learn new processes. Also if any subsidiaries face any problem regarding manufacturing the Japanese experts would come over to solve the problems. In Scotland the company encourages people to develop at operator level, both in-house and in colleges and other educational establishments, and finances their further education. In Japan, because employees stay in the company a long time, they have large, established internal training and recognized formal qualifications. The GM‘s observation from working in Seiko plants in Japan is that Japanese style consensual decision making offers unsatisfactory compromises. He says decisions take more time to be madeIn the Scottish site employees are more frank. In case of pay and benefits, all of the pay and benefit policy is made locally. Seiko‘s pay is pay is competitive, with rewards for hard work. They also offer paternity leave, pensions, life assurance and sick pay. The Scottish site is not unionized, but the Japanese sites have company-based unions. In Scotland there are grievance procedures in place to enable the employees to file claims against their boss, but such a system does not exist in the Japanese sites.

6 Company Profile

Company logo

Type Subsidiary

Industry Electronics

Founded Tokyo, Japan (1937)

Headquarters Chiba, Chiba, Japan

Products Micromechatronics devices, Network components, Information-related equipment and services, Printers, Scientific instruments, etc.

Revenue ¥190,800 million (nonconsolidated); ¥274,400 million (consolidated) (Fiscal year ended March 31, 2005)

Employees 2,796 (nonconsolidated); 14,841 (consolidated) as of February 28, 2006

Parent Seiko Holdings Corporation(100%)

Subsidiaries Morioka Seiko Instruments Inc., SII Nanotechnology Inc., SII Network Systems Inc., SII Mobile Communications Inc., SII Data Service Corp., Seiko Instruments Korea Inc., Dalian Seiko Instruments Inc., Seiko Instruments (Shanghai) Inc., Guangzhou Seiko Instruments Ltd., Seiko Instruments Taiwan Inc., Seiko Instruments (Thailand) Ltd., Seiko Instruments U.S.A., Inc., etc.

7 Question No.1

Why has the parent company adopted and HRM strategy which would allow overseas subsidiaries to perform their personnel function autonomously?

As Seiko Instruments‘ parent country is Japan, it has plant in Scotland. All practices are driven from the Scottish site. General Manager of this plant is an Scottish. So It focuses on Polycentric approach of International Human Resource Management .That means it treats Scottish plant a distinct national entity with some decision making autonomy. Here from the case we have got that personnel function operates entirely autonomously which proves that it follows polycentric approach of HRM.

Reasons are as followed:

1. Employing Host Country Nationals eliminates language barriers. 2. It helps to avoid the adjustment problem of expatriate mangers and their families. 3. It removes the need for expensive cultural awareness training program. 4. Employment of host country nationals is inexpensive. 5. It avoids the turnover of key managers as senior management is employed from host country like Scotland. 6. Scotland is close to European markets and it has stable skilled workforces. 7. The organizational structure is constrained by British standards. 8. Only polycentric approach allows host country dominance in managing the operation in that country. 9. General Manager is employed from host country.

These are the reasons 0f parent company like Seiko Instrument (Japan) adopted Polycentric HRM approach which allows overseas subsidiaries to perform their personnel function autonomously.

8 Question-2

In what respect is the Scottish Subsidiary’s recruitment policy different from its Japanese parent company, and why?

Due to some cultural, social and policy restriction, the Scottish Subsidiary‘s recruitment policy different from its Japanese parent company. The differences between the Scottish and Japanese recruitment policy are discussed in the table below:

Scottish Subsidiary‘s S.N. Japanese parent company Recruitment is done from of local subsidiaries. 1. Recruitment is done from the Head Quarter It believes that teenagers and school leavers are not 2. It believes that teenagers and school obedient and serious about job. leavers are obedient and serious.

Recruitment practices are driven from Scottish site. 3. Head quarter intervenes while recruitment process is being done. Scottish Subsidiary‘s emphasis on Polycentric 4. Japanese Parent company focuses Staffing Approach. on Ethnocentric Staffing Approach.

Why it differs from parent company is given below:

The main reason is that Japanese parent company follows Ethnocentric Approach of Staffing on the other hand Scottish Subsidiary‘s focuses on polycentric Staffing Approach. In Japan they select school leavers for operators. But in Scotland it is not suitable because the youngsters of Scotland are not more obedient and better educated. Also they have absenteeism, low work morale and other problem.

9 Question 3:

Why has the local management team decided not to implement some of the Japanese parent company’s practices in Scotland?

The Seiko Group is Japanese group which operate independently but function as a cohesive unit over 70 subsidiaries. In 1988 Seiko completed the world‘s first automated assembling system for multipurpose, small-lot production of watch movements.

The organizational structure is constrained by British standards in some respects, in common with other Japanese companies operating in the UK.

Most personnel policies of the Scottish site are made locally; the site is given targets and a free range to achieve them the Scottish way. The company‘s policy is to respect local ways-they try to adapt local management practices 100 percent within the Scottish location. People management is designed locally, mainly by the General Manager. The local management team has decided not to implement some of the Japanese parent company‘s practices in Scotland because some practices did not match with the practice of Scottish. Some of the sectors are stated below where Japanese parent company‘s practices not implemented in Scotland.

Recruitment

In Japan they select school leavers for operators. But in Scotland they do not employ school leavers and teenagers because absenteeism was a problem at this stage and they were considered unreliable and unaccustomed to this kind of work.

Training

In case of training difference exist between Japanese and Scotland. In Japan, employees are loyal to the company because employees stay in the company a long time, they have large, established internal training and recognized formal qualifications. In Scotland the company