Nenkou joretsu: Seniority system

The nenkou joretsu, or seniority system, is the personnel system that determines employees’ position and compensation for work based on their age or the number of years they have been employed at the company, rather than their skills and performance. Many Japanese corporations used to adopt this system, often alongside other traditional systems such as new graduate recruitment, job rotation, and lifetime employment. Regardless of employees’ achievements in the job, employees can expect their salary and position to go up steadily level by level each year. A negative outcome, on the other hand, is that this can lead to a loss in motivation for employees with excellent performance skills.

Although many large corporations still utilize personnel systems that are based on the seniority system, more and more corporations have been abolishing the system recently and switching to a merit-based system to secure excellent employees.

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