Japan pioneers incentive programmes for reduced overtime

If you’ve thought that business is all about trying to get people to exceed their working hours and maximise output – you may surprised to read that companies in Japan are trying to cut down overtime hours by offering bonuses and other benefits for employees who clock out on time.

Reported in Mainichi Japan, companies all over Japan in a wide range of sectors have been working to cut down on overtime, and instead, are ploughing cash saved back into employee benefits in areas such as training, development and wellbeing.

Haruyama Holdings Inc are one of the business who has introduced a range of incentives that include all workers – including managers to stop overtime.

“The change came in December 2015 when the company was looking for methods to separate itself apart from its competitors. Haruyama Holdings decided to advertise the well-being of its employees along with their products. One way in which the company embarked on the mission was to reduce overtime. The average overtime worked by Haruyama employees during the 2015 fiscal year averaged 11.3 hours a month, much less than other workers in the same industry.

To further shave off over time, company executives believed that a revolution in the way employees thought about additional working hours was needed, so they introduced the “no overtime benefits” system. If an employee works no overtime a month, they receive 15,000 yen, while those who work overtime receive extra money in addition to their overtime pay to a total of 15,000 yen. If the overtime pay adds up to more than that amount, then it is awarded normally.”

The results paid off. In the April of launch, a total of 142 employees received the full amount of the awarded funds, and over time dropped about 15 percent from the previous fiscal year.

Another company, Nidec Corp has launched the same type of initiative but has also used the money saved from overtime payments to fund employee training programs. “Nidec is aiming to completely eliminate overtime work by 2020, and took steps such as reducing the length of meetings in April 2016. While the results were promising, senior vice president Takeaki Ishii says, “If employees thought that their pay decreased even though productivity rose, there was no way that overtime reduction would work.” So, the company took a step further to introduce a different benefit system.

“In the end, the reduction of overtime is to increase productivity, and since we’ve introduced the new measures, our sales and profits have continued to increase,” says Ishii.

Mitsubishi Jisho Property Management Co have also saved roughly 84 million yen – £582,509 – which went back to workers as a special “work-life balance” bonus using a method where each employee was rewarded an amount based on the number of overtime hours they had stopped doing.

They have long term plans to continue the strategy saying:  “From now on, it will be necessary to set up a system where the amount equivalent to reduced work time will be returned to the employees in the form of increased salary instead of incentives or bonuses.”