We would like to summarize the defects of performance-based salary system. The performance-based salary system…
On January 19th, 2004, a radical criticism against the performance-based salary system was published. The book Fallacy of Performance-Based System -- Recommendation of Revival of Japanese Seniority System (Nikkei BP Publications, Tokyo: ISBN 4822243729; English translation is not available) is written by Nobuo Takahashi, author of Design of Adaptive Organizations: Models and Empirical Research (Springer Verlag, July 1987). He was born in 1957 and now Professor in Faculty of Economics of the University of Tokyo, specializing the management organization theories. Although most Japanese employees feel uncomfortable about the performance-based salary system that more and more Japanese companies introduce these days, we Japanese can't articulate the reasons of the feeling. This book proves the fallacy of the performance-based system with strict logic referring to historical fruits of various management theories, such as James Abegglen, Alfred Chandler, Edward Deci, Peter Drucker, Abraham Maslow, Edith Penrose, Frederick Taylor, Victor Vroom, etc… In this essay we would like to try to summarize the core argument of his criticism against the performance-based salary system.