“Organization Culture Transformation” is one of the three major initiatives of the Panasonic Group’s human capital management, along with “Develop & Appoint Transformational Leaders” and “HR Modernization.” To promote this initiative, we are strategically designing our culture based on “the 6 Principles of Organization Design.”
Our Transformation Approach
An organization’s culture does not form naturally; it is crucial to design it by our own will to maximize business performance. No matter how excellent a business strategy may be, its execution relies on people. The results are greatly influenced by individual’s behavior and the culture. However, if employees cannot UNLOCK their potential, it will not lead to their challenges or growth. Furthermore, if the culture does not align with the strategy, the whole organization will not be able to fully leverage its capabilities. Therefore, we have established “the 6 Principles of Organization Design.”
What are the 6 Principles of Organization Design?
Any one of the 6 Principles of Organization Design does not function alone. Strengthening only one area will not bring about culture transformation. It is the mutual connection and alignment of each Principle that enables them to function effectively and supports the overall growth of the organization.
For “Recruitment & Selection of Leaders,” the development and appointment of bold, diverse, and transformational leaders is essential. “Work Design” should support the work of appointed leaders by supplying them with an environment to work in a “flow state.” Results are rewarded appropriately based on clear and direct “Evaluation & Compensation.” For “Information Sharing & Learning Processes,” employees are encouraged to gain wider perspectives. All the principles must be interconnected and aligned for a greater impact. With this initiative, we aim for business growth as the result of individuals and the organization growing together.
- Evaluation & Compensation (including non-monetary): Eliminate lukewarm behaviors. Reward the actions and results of every member.
- Decision-Making: Focus on speed, not perfection.
- Information Sharing & Learning Process: Focus externally and promote curiosity.
- Recruitment, Training & Selection of Leaders: Develop and appoint bold transformational leaders.
- Design of Work: Create an environment that fosters an enthusiastic “flow” state.
- Organizational Structure & Placement: Establish streamlined organizations and eliminate sectionalism.
*These principles are for the entirety of Panasonic Group. However, each operating company has the freedom to tailor the content to their needs.
Our Founder’s Philosophy in the 6 Principles of Organization Design
– Concept of “Decision-Making” and “Evaluation & Compensation”–
The core concept of “the 6 Principles of Organization Design” is not something new to the Panasonic Group; it is a systematization of the management philosophy that founder Konosuke Matsushita valued, which is adapted to the current organization environment. In his book “Real Leader’s Requirements” (published by PHP Institute, Inc.), the founder outlined 102 principles for what is required of any leader of an organization. Please see our founder’s words (excerpted below).
Essence of Decision-Making
– Strength to Determine and Delegate –
The founder once stated “The ability to make swift decisions and take immediate action for critical matters is an essential requirement for any leader.” He emphasized that leaders in charge must be capable of making agile decisions. As he put it, “It is unacceptable to spend days neither making decisions nor taking action as needed.” His words suggest a delay in judgment can lead to missed opportunities and a loss of competitive edge.
Meanwhile, he also highlighted the importance of not shouldering all decision-making responsibilities alone. His remark is “The power of an individual is inherently limited. When someone tries to push themselves or others beyond those limits, failure results. The best approach is to work within a range that aligns with one’s abilities. If a task appears to exceed those capabilities, it will be preferable to break it down and delegate it among several people.” By proper delegation of authority, we can enhance the speed of decision-making across the entire organization.
Panasonic Group is returning to this philosophy, striving to further instill a culture with decision-making that embodies speed and flexibility.
Concept of Evaluation & Compensation:
Employees’ Challenges & Results
The founder also said, “When there are achievements, they should be rewarded. Then, if there are mistakes, they should be punished accordingly. Only when fairness in reward and punishment is properly implemented, the discipline of the Group can be maintained with its employees having the motivation to strive.” He emphasized that fair evaluation and compensation are essential for the growth of an organization.
By proper assessment of achievements and responding to a spirit of challenge, the enthusiasm of employees can be drawn out further, leading them to take on even greater challenges. He also remarked, “I believe there is nothing lonelier than having your efforts go unrecognized by others. Receiving praise brings joy and boosts your confidence. It also ignites a desire to achieve even more, serving as motivation for growth. Of course, it is important to address failures and mistakes when necessary. However, when any employee does something commendable or achieves certain results, offering heartfelt praise and appreciation is one of the keys in leadership.” Appropriate evaluation and feedback will serve to enhance employee motivation and become a driving force for future growth.
Panasonic Group is working to create a culture which appropriately evaluates each employee based on these values and ideas.
Best Practices Applying the 6 Principles of Organization Design
The content of these 6 Principles of Organization Design are subject to the challenges and goals of each business division/unit related to their business strategy, organization culture, and action plan. Here we showcase some examples of applying these 6 Principles of Organization Design.
Mobile Solutions Business Division (Panasonic Connect Co., Ltd.)
In this Division handling the notebook PC business, we are pursuing a management approach focused on “profit-oriented management” and implementing a reform of “selection and concentration” to thoroughly eliminate waste in our operations. While this reform involves some pain as we reassess every single task from a zero-based perspective, we are promoting a strategy to channel the profits generated from these reforms into new growth, ensuring that all employees understand this through platforms such as All Hands Meetings (interactive meetings involving all company members), Q&A sessions, and 1 on 1 meetings.
Moreover, we strive to keep management data and materials from key meetings as open as possible, flattening the communication across the organization to stimulate agile decision-making.
To enhance information sharing and foster two-way communication, we are also working to cultivate a corporate culture where team members can ask anytime with no hesitation, “Can I ask you something?”
Regarding our HR strategy, we are implementing Panasonic Connect’s unique “New HR Management” approach, promoting clear and direct increases in salary and promotions, as well as facilitating personnel mobility both within and outside the Business Division to incorporate diverse perspectives. Through these initiatives, we aim to improve our performance and employee engagement, striving for further development.
China and Northeast Asia Company (Panasonic Corporation)
This company has the policy, “Decisions on China are made by China.” It promotes organization design based on the 6 Principles of Organization Design with opinions from more than 4,000 members taken into consideration.
Decision-Making in the China and Northeast Asia Company focuses on implementing “China Speed, China Cost, and China Style.” The establishment of a decision-making system close to actual sites enables agile reaction to any change in the market or customers. The bold selection and assignment of leaders from local employees fosters an environment where diverse human talent can thrive. Furthermore, with the encouragement of learning and incorporating knowledge from other companies or business divisions accelerates the growth of the organization.
- Please Refer to Human Capital Management Data of the Panasonic Group for the basic data on our three key initiatives, “Organization Culture Transformation,” “Develop & Appoint Diverse, Transformational Leaders,” and “HR Modernization,” as well as information on personnel, diversity, work styles, and careers.