A re Japanese engineers still en joying a lifetime employment and a seniority system that had characterized Japan's employment?

The answer is no. Severe international business competition is putting pressure on Japanese companies to review their employment system-and how they use engineers.

"Differing from the United States, 'no layoff' is an important precondition in Japan," said Atsushi Murayama, Matsushita managing director in charge of personnel and general affairs. "Under this restriction, we have to re-allocate engineers so that the company can cope with swiftly changing technical demand. This is a challenge."

Like Matsushita, many companies are trying to change their employment system without firing employees. This will be a challenge because they have to vie on the same ground with foreign companies, which have no such restrictions.

Nobuo Sakamoto, manager of NEC human resources, compared salaries between the U.S. and Japanese engineers that appeared in EE Times 's salary survey last year and observed, " in general, Japanese engineers are paid less than their performance merits when they are young and more when they get old." He said the salary structure is based on a seniority system and assumes that it takes about 10 years for a new graduate to grow to a full-fledged engineer. But in this system, "in the worst case, a salary goes up just because an engineer stays longer at a position. We have to change the salary system to a job-and-result-based system." Just over 25 percent of the Nikkei Electronics respondents to the "1997 EE Times Salary and Opinion Survey" said they work under a seniority wage system.

Toshiba introduced a "free-time system" at its R&D Center back in 1994 pursuing a pure result-based system. In the free-time system, researchers are required to report only where they are going towork-at the office, at home or elsewhere. How many hours they work a day is at their discretion and they just report the hours through their personal computers.

Started with 157 resea rchers in July 1994, the number of researchers on the free-time system has since grown to 375.

After the system was introduced, researchers' working style shifted to an early-bird type, said Kazuhiko Saitoh, manager of the Personnel and Employees Relations Group at Toshiba.

The percentage of researchers who work less than standard working hours but get results was only 0.6 percent (one engineer) in 1994, the first year. But it grew to 6 percent in 1996. "We are expecting that the percentage will grow to about 10 percent. [They'll] work less but get results. That means they can control their time and be confident in what they do," said Saitoh.

However, the Japanese free-time system is not completely free from time management because of the restrictions imposed by the Labor Standards Law.

The free-time system applies at present only to special job categories, and Toshiba applies it only to its laboratory researchers.

The labor-standards law is now being amended, but labor and manag ement are split over its implications. Management favors the free-time system and wants to expand it from current R&D and some limited jobs to the planning department and other white-collar workers. Labor representatives argued that the system would force workers to work longer hours and would jeopardize their health.

"If the time management remains," Saitoh said, "it is not a pure result management. So we are going to negotiate further with the union so that the job can be evaluated only by result and not by hours."

Based on the operation at the R&D center, Toshiba is considering an expansion of the free-time system to white-collar workers at headquarters, pending negotiations with the company's labor union.

When result management substitutes for the seniority system, evaluating the results properly becomes vital.

Seeking an objective evaluation system, Hitachi Ltd. introduced a professional test program to system and software engineers at its information division and group comp anies.

"The purpose of the test is to evaluate engineers' capability. The test is the base for the Job Grade system," said Toshiaki Katayama, deputy division manager of the Strategic Business Development Division at Hitachi's Information Systems Group.

The Job Grade system is a job- based salary structure that replaced the seniority-based salary system in April.

The Job Grade system defines four jobs-managerial staff, professional staff, trainee and associate staff-and each job is divided into three to five grades. Salary is based on the grade.

Promotion is no longer based on seniority. To rise to an upper grade, engineers have to pass the once-a-year test. "The test is a necessary condition but not a sufficient condition to be promoted. Other aspects are taken into consideration," said Katayama. "The Job Grade system may not be perfect, but it's better than the seniority system to reflect engineers' capability," he said.

The first test was conducted last October on 15,000 system e ngineers at headquarters and 19 affiliated companies. All engineers have to take the test once every two years.

"The test is not easy to pass," said Katayama, though he did not disclose the passing percentage.

The Job Grade system may be a unique system in Japan, but it faces limitations even in Hitachi. It is in place only at Hitachi's information-group companies. Katsuhiro Takeda, manager of human resources at Hitachi's Information Systems Group, said, "Hitachi headquarters has a variety of business divisions from heavy electric to consumer electronics."

To cope with engineer shortages and to allocate engineers efficiently, Fujitsu decided to launch a new system in September, named Skill Net.

The company has 17,000 system engineers at its headquarters and at nearly 40 related companies. Each of these system engineers was asked to create a home page that describes his or her technical background, qualifications, achievements and technical skills. Fujitsu put up the home pages on its in tranet and built a systems-engineering human resource database. A project leader can search for systems engineers with required skills through the home pages or the database. The engineers who are recruited, in principle, can attend various projects across section boundaries. Fujitsu intends to make the interchange flexible, allowing systems engineers to stay in their position or to move to other sections when necessary.

Japanese engineers are now facing drastic change in their working conditions.

However, as Matsushita's Murayama points out, "Most Japanese engineers know how to adapt themselves to the change and to cover necessary technologies that the company demands.

"This kind of flexibility is Japan's advantage."

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