With shift toward merit-based pay, Japan's Hitachi to drop old ways

Seniority-based pay made sense when the factory floor was the main training ground and new hires were taught to produce TVs, displays and chips from scratch, Chairman Hiroaki Nakanishi said in an interview. "That model no longer works," he said

TOKYO: Hitachi Ltd is moving to scrap a remnant of one of Japan Inc's most famous practices: seniority-based pay.

The change reflects Hitachi's transformation from a hardware-focused manufacturer into a services business and highlights the realisation that for many Japanese firms old-school human resources practices aren't practical.