Performance-related reward systems (PRRS) in Japan: practices and preferences in Nordic subsidiaries

Abstract

An increasing number of companies in Japan have implemented performance-related reward systems (PRRS) due to the demerits in seniority-based reward systems, economic slowdown, increasing global competition, and an aging workforce. This study focuses on reward systems and preferences in foreign subsidiaries in Japan, an area that has been overlooked. In contrast to the convergence view that best practices are universally applicable, interviews conducted in 60 Nordic subsidiaries show that PRRS have faced considerable resistance, while seniority-based reward systems have proved robust, especially in older subsidiaries. Implications for practice and suggestions for future studies are provided.