Are you still thinking of HR as a “back-office function” or a “money drain”?

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1. Introduction – HR Must Never Shy Away from Effort

One of the greatest challenges facing Japanese companies today is the lack of trust in performance evaluations. Most employee dissatisfaction stems from how they are evaluated, because evaluation is directly tied to treatment, and treatment ultimately shapes a person’s life. If evaluations are opaque, employees feel unseen and lose trust. If they are perceived as fair, people can accept even harsh results.

This simple truth has been put into practice by Iris Ohyama for over 20 years. The company introduced a 360-degree evaluation system for all employees and has consistently invested the time and effort to ensure fairness and transparency. Today, this approach has grown beyond being a “system” and has become part of the company’s culture. Their practice makes one message very clear: HR is not a place for shortcuts—it is where effort must be invested.

2. Iris Ohyama’s 360-Degree Evaluation – Effort Becomes Culture

What Iris Ohyama demonstrates is that “to evaluate people properly requires effort.” Their system reflects this philosophy.

Every employee is subject to evaluation, including the president and executives. Feedback does not come from a single direction but from three perspectives: supervisors, colleagues from other departments, and subordinates. Each employee is evaluated by at least 15 people, sometimes as many as 30.

The results are visualized in radar charts, making the gap with self-assessment painfully clear at times—but that gap is also where growth begins. The company also issues a “Yellow Card” to low-rated employees. This is not a punishment or stigma, but rather a wake-up call, encouraging awareness and a chance to try again.

Promotion requires more than seniority. Around 900 employees submit essays each year, and 200 go on to presentations. These are evaluated not only by direct supervisors but also by leaders from other departments and even the president. Bias is reduced by involving multiple perspectives.

Furthermore, twice a year, the company holds an “Evaluation Grand Prix,” where employees present their achievements to the entire company. The message is clear: the company sees you, and your work matters.

Over time, this investment of effort has transformed HR into something larger than a system—it has become culture.

3. Structural Problems in Japanese HR

Why do so many Japanese companies avoid investing similar effort into HR? The reasons lie in historical structures that continue to shape corporate culture today.

Seniority-based systems
Carried over from the high-growth era, length of service still directly influences promotions and pay. This blocks fair evaluation of talent.
Low status of HR
HR has long been treated as an extension of general affairs, focused on payroll and labor administration, rather than a strategic function. As a result, HR and management remain disconnected.
Post-bubble cost-cutting
Since the 1990s, HR has been reduced to a mechanism for cutting personnel costs. Evaluations became tools for downsizing, not for development.
Efficiency-first, short-termism
Quarterly earnings and stock prices take priority. Careful evaluation is dismissed as “inefficient,” leading to oversimplified systems.

Together, these factors have confined HR to the role of “administration,” stripping it of strategic importance.

4. The Western Perspective – HR as a Core of Management

By contrast, in Europe and the U.S., HR sits at the frontlines of management. The guiding principle is clear: HR is strategy.

Evaluation as a tool of execution
Companies like Google and Intel use OKRs and MBOs to cascade corporate strategy down to individual goals.
Direct link between evaluation and rewards
Results determine salary increases, bonuses, and often long-term incentives such as stock options.
Multi-source evaluation and continuous feedback
Microsoft and Adobe use 360-degree reviews and frequent check-ins, treating evaluation not as a judgment but as growth support. Adobe even abolished annual reviews in favor of monthly conversations.
CHRO participation in top management
In many U.S. firms, the CHRO reports directly to the CEO, designing business and talent strategies together.

In short, HR is seen as a weapon of management in the West, while in Japan it has long remained a mere appendage.

4.5 Japan vs. the West – The Structure of Division

The contrasts can be summarized as follows:

Aspect	Japan	West
Evaluation criteria	Seniority-based; years of service matter most	Performance- and ability-based meritocracy
HR’s role	Extension of general affairs; administrative	Core of strategy; CHRO can challenge the CEO
Evaluation–reward link	Weak; fixed raises still dominate	Strong; results tied to pay, promotion, and stock
Feedback culture	1–2 interviews per year	Quarterly reviews and continuous dialogue
Depth of evaluation	Subjective, supervisor-dependent	Multi-source reviews ensure transparency

This comparison makes one thing obvious: in Japan, HR has been boxed into an administrative corner, disconnected from management. Seniority systems and cost-cutting logic have further widened this divide, weakening both employee trust and corporate competitiveness.

5. The Call to Action – HR Must Be Where Effort Goes

The lesson here is not that “every company should introduce 360-degree reviews.” The real message is broader: HR must be given depth, time, and care.

That means:

Expanding the number of evaluators so results don’t depend on a single boss.
Conducting feedback sessions quarterly instead of only once a year.
Requiring essays or presentations in promotions to measure thinking ability.
Sharing success stories across the company to embed evaluation into culture.

These efforts may look inefficient on the surface, but in reality they strengthen trust, reduce turnover, and raise productivity in the long run. Evaluation is not just a score—it is the clearest message that “you are being seen, and you are expected.”

6. Conclusion – HR as the Source of Culture

The true value of Iris Ohyama’s system lies not in its technical details but in its philosophy: never spare effort when it comes to people. The fact that it has continued for over two decades proves that the company treats HR as an investment, not a cost.

What Japanese companies have lost is not a system but an attitude. Efficiency-first thinking and cost-cutting have hollowed out HR, accumulated frustration among employees, and weakened organizational culture.

HR is not an expense. HR is culture, and it is strategy itself. The future of a company is shaped not by shortcuts, but by the willingness to put in the effort where it matters most.

So ask yourself: how much effort is your company truly putting into HR?

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