Isn't seniority-based management better than merit-based management?

I think that the personnel systems of Japanese companies have become more merit-based than seniority-based.
I think that Japanese companies had a high growth rate when seniority-based management was used, and the growth rate fell as merit-based management increased.
Isn't seniority-based management better for the development of companies than merit-based management?

ChatGPT:
The personnel systems of Japanese companies used to be based on seniority-based management. This system, in which wages and status increase according to age and years of service, promoted stable employment and worker loyalty, while also being an important factor supporting the growth of companies. During the period of high economic growth in Japan, seniority-based management was particularly effective, and organizational stability and consistency were major advantages.

However, with the changes in the economic situation after the collapse of the bubble economy and the intensification of global competition, the number of companies introducing merit-based management has increased. This is a movement to increase innovation and competitiveness by evaluating employees based on their individual abilities and performance, and determining compensation and promotions based on those abilities and performance, with the aim of more efficient and flexible management.

However, the introduction of a merit-based system does not necessarily lead to corporate growth. Rather, there is a risk that placing too much emphasis on short-term results will result in a lack of a long-term perspective, which will undermine employee motivation and teamwork. This can lead to the breakdown of cooperation throughout the organization, making sustainable growth difficult.

It is difficult to say whether seniority-based or merit-based systems are better for corporate development, but the following factors must be considered.

1. Advantages of seniority-based systems
   Maintain organizational stability and consistency
   Human resource development from a long-term perspective
   Improved trust and cooperation among employees

2. Advantages of merit-based systems
   Efficient personnel allocation
   Improved motivation (especially rewards for excellent personnel)
   Flexible organizational management and improved competitiveness

It is interesting to note that Japanese companies grew faster during the seniority-based system, but this is also largely influenced by changes in the economic situation and society as a whole, so it cannot be said that this is solely due to the system. For a company to develop, it may be necessary to have a long-term perspective while balancing seniority and meritocracy.

What do you think about the following disadvantages of meritocracy?
・You will seek short-term results
・You will seek individual results rather than team results
・You will stop doing work that your boss does not evaluate
・You will lose motivation if you are not evaluated fairly
・It takes time and money to evaluate fairly
・The boss's preferences are reflected, so fair evaluation is impossible

ChatGPT:
As you pointed out, meritocracy has several disadvantages, which often make it difficult to operate the system. Below, we will explain each disadvantage in detail.

1. It will seek short-term results
   The major problem with meritocracy is that it tends to focus on short-term results. Employees tend to focus on work that produces immediate results, and may neglect long-term projects and work that contributes to the sustainable development of the company. This tendency is a risk, especially in industries and fields that require a medium- to long-term perspective.

2. It will seek individual results rather than team results
   When meritocracy emphasizes individual results, teamwork can be damaged. Employees tend to prioritize their own evaluation and promotion, and pursue individual success over working with others. This can result in a decline in the performance of the entire organization and a weakening of team unity and cooperation.

3. Work that is not evaluated by superiors is no longer done
   It is also a problem that work that is not clearly evaluated by superiors and contributions that are not easily visible are neglected. For example, if personnel who play supportive roles in the team or long-term strategic roles do not immediately produce visible results, there is a risk that their value will be underestimated. As a result, employees may focus on visible work that is likely to be evaluated by superiors, and important but inconspicuous work may be neglected.

4. Motivation decreases if evaluation is not fair
   In a meritocracy, evaluations tend to be subjective, and if employees feel that their efforts and results are not evaluated fairly, their motivation will decrease significantly. In particular, if employees are evaluated differently despite having produced the same results, a sense of unfairness will be created within the organization, which can have a negative impact on employee morale.

5. It takes time and money to conduct fair evaluations
   In order to operate a meritocracy fairly, it is necessary to set detailed and transparent evaluation criteria and have a system to accurately evaluate individual performance. This takes a lot of time and money, and in some cases increases the burden on the company. In addition, if the evaluation process becomes complicated, employees are more likely to distrust the evaluation system.

6. The boss's preferences are reflected, making fair evaluation impossible

Since merit-based evaluation is ultimately performed by humans, there is a problem that the boss's personal preferences and biases are easily reflected. This is particularly noticeable when the evaluation criteria are vague or when qualitative factors are emphasized. If the compatibility between the boss and the subordinate or the evaluator's subjectivity affects the evaluation, the fairness of the merit-based system itself is compromised, which causes dissatisfaction for employees.

These drawbacks are often discussed when merit-based systems are introduced. Possible solutions include the following measures.

Setting evaluation criteria that balance short-term and long-term:

Incorporate not only short-term performance but also long-term contributions into the evaluation.

Evaluate team performance:
Introduce a system that evaluates the performance of the entire team, not just individuals, and promotes cooperation.

Introduction of 360-degree evaluation:
Incorporate feedback from multiple evaluators (colleagues, subordinates, other departments, etc.) to prevent bias in evaluation.

Setting clear and transparent evaluation criteria:

Establish evaluation criteria that are understandable to everyone and make the evaluation process transparent.

Meritocracy can be a means of increasing a company's competitiveness if it is implemented well, but it is essential to create a system that complements its shortcomings.

Is there a better way to implement a company's personnel system than merit-based or seniority-based systems?
For example, how about incorporating employee nominations and subordinate voting?

ChatGPT:
Incorporating employee nominations and subordinate voting as a method other than merit-based or seniority-based systems in a company's personnel system is more democratic and is expected to bring out employee initiative and leadership. However, there are advantages and disadvantages to this. We will look into the possibilities in more detail below.

Advantages of an employee nomination system

1. Promoting self-initiative:
   When employees apply for promotion or leadership positions on their own, their motivation for self-growth increases. Employees will actively choose their careers and take concrete action toward the positions they are aiming for.

2. Improve employee motivation:
   When employees have confidence in their abilities and skills and are willing to take on new responsibilities, it leads to increased motivation. In addition, promotions and challenges to new roles become open and transparent processes, which may reduce feelings of unfairness.

3. Placement of the right person in the right position:
   Since employees themselves choose roles based on their strengths and skills, they can stand in positions that suit their abilities, which may lead to improved corporate performance.

Disadvantages of the personal candidacy system

1. Risk of no candidacy:
   Employees who are cautious or who underestimate themselves may not run for office at the right time. Conversely, there is a risk that overconfident employees will run for inappropriate positions.

2. Increased competition:
   A candidacy system may increase competition among employees, undermining a cooperative corporate culture. It may also worsen interpersonal relationships between employees.

3. Overestimation/underestimation of abilities:
   If employees' self-perception does not match their actual abilities, it may be difficult to place the right person in the right position. It can be a risk for an organization if a person who has too high an opinion of themselves is given a position of responsibility.

Advantages of evaluation and promotion by subordinate voting

1. Evaluation of leadership:
   Subordinate voting can evaluate the suitability of a leader and potentially lead to appropriate leadership for the organization. It is expected that a leader who is trusted by subordinates and can gain followership will be selected.

2. Reflection of team opinions:
   Instead of the traditional top-down evaluation, subordinate opinions are reflected, so fair evaluations that reflect the voices of the field can be realized. This can improve employee engagement and motivation.

3. Cultivation of a democratic culture:
   By incorporating democratic processes into decision-making within a company, transparency is increased and it becomes easier to build trust among employees.

Disadvantages of evaluation and promotion by subordinate voting

1. Risk of becoming a popularity contest:
   There is a risk that evaluations by subordinate voting will be biased toward "popularity" and "likeability" rather than achievements and abilities. This can result in cases where people with real ability are not promoted, or where people with strong interpersonal skills but poor practical skills are promoted.

2. Formation of factions:
   When subordinates vote, there is a risk that factions will form within the department, which can undermine cooperation and unity within the organization. In particular, there is a risk that voting will not be fair in situations where conflicts of interest are involved.

3. Lack of professional evaluation:
   Even if subordinates can evaluate their superiors' leadership, they may not be able to give a fair evaluation for positions that require management judgment or high levels of specialized knowledge. This can make it difficult to place the right people in important management positions.

A balanced approach

Methods that utilize self-nomination and subordinate voting are effective in promoting employee initiative and a democratic evaluation process, but their weaknesses can be compensated for by combining them with other elements. For example, the following approaches can be considered.

1. 360-degree evaluation:
   This is a method that comprehensively combines the employee's self-evaluation and feedback from colleagues, superiors, and subordinates. This allows for a multifaceted evaluation of individuals and reduces the influence of bias.

2. Role-based selection criteria:
   For positions that require leadership or skills, not only can nominations and subordinate voting can be used, but by limiting the selection to those who have cleared certain skills and performance evaluations, it is possible to place the right people in the right positions.

3. Team-based goal setting:
   By reflecting the performance of the entire team in addition to individual evaluations, it is possible to balance individualism and teamwork.

As such, the nomination system and subordinate voting are interesting ideas, but they may not be a perfect personnel system on their own. Depending on the company's situation and culture, an approach is required that maximizes the effectiveness while reducing risks by combining them with other evaluation systems.