Does Japan's Time-Based Hierarchy Have a Future?

If you've ever worked alongside Japanese people, you've probably encountered Japan's unique hierarchy system and felt a bit confused by it. Here are some examples:

• People address each other with honorifics like "○○-san" or "○○-sama"
• Even a one-year difference in when you joined the company makes you senior or junior to someone (senpai-kohai)
• University graduates are hired together as new employees and become part of the same cohort
• People use formal language (Keigo) when speaking to those of different positions or ranks

Of course, hierarchies exist in societies worldwide. Some countries have religiously predetermined hierarchies, others base them on social status or position, and still others determine hierarchy by wealth. The forms vary widely.

What's distinctive about Japan's hierarchy, though, is that even in business—where results should matter most—factors like "age" and "years of service" often determine where you stand in the pecking order.

Unlike in sports, where ability is visible, the business world is more complex. Depending on the role and situation, sometimes communication skills matter most, sometimes it's execution ability, and other times it's leadership. Who's "most capable" can shift depending on the context. So it makes sense that social hierarchies would emerge beyond simple meritocracy.

Still, I don't think there's another country quite like Japan, where even in business, hierarchy is determined more by time-based factors than by ability or results. In this article, I want to explore Japan's unique social hierarchy system.

Why Are Age and Years of Service So Important in Japan?

There are two primary reasons why Japan's hierarchy is often determined by age and years of service at a company.

First, there has been a social environment where longer tenure increases the likelihood of benefiting the organization—where time served translates into potential company profits.

For example, Japan's major corporations have long maintained both "lifetime employment, where people work at one company from graduation to retirement" and "fixed trading relationships between large companies and their subcontractors."

When companies adopt lifetime employment and maintain long-term internal relationships, they can conduct business smoothly and quickly within those relationships without needing detailed contracts or constant alignment meetings.

As a result, employees at these large companies and their affiliated subcontractors need to optimize themselves for each company's unique business practices and communication rules.

This means that individual employees' relative abilities or results matter less than their years of experience, which allows them to better understand company-specific business customs and develop the ability to read unique communication patterns. Age and tenure-based hierarchy naturally emerge from this.

In other words, when conducting business within fixed, limited relationships, employees with more years of experience—who thoroughly understand and have optimized for the unique internal rules—are most likely to advance business and generate profits. Age becomes a key factor in hierarchy formation.

The second reason is that "Japanese people grow up within age-based hierarchies from childhood through their school education."

In Japanese schools, students are divided by age into grade levels, and even a one-year difference creates a "senior-junior" (senpai-kohai) hierarchy. These relationships are visibly defined.

For example, you're required to use formal language with seniors, different grades might wear different colored slippers, and juniors should bow when greeting seniors. Through these practices, an age-based hierarchy is formed in visually clear ways.

Since most Japanese people receive this age-based hierarchy education through school, it's likely that even after entering the merit-based business world, they maintain these age-based hierarchies to some extent.

The Collapse of Hierarchy and Japanese Confusion

However, age and tenure-based hierarchy only work when business is conducted within fixed, limited human relationships.

Since the advent of the internet, business is no longer confined to these fixed relationships. It's become normal to conduct business with better partners across a much wider range.

Additionally, Japan's prolonged economic stagnation has made it increasingly necessary for Japanese businesses to work not just with other Japanese companies, but with overseas firms as well.

In this environment, "the opportunity cost of not pursuing new business opportunities" has grown exponentially compared to traditional Japanese society.

That's why newer startups and small-to-medium enterprises are increasingly eliminating age and experience-based hierarchies in favor of promoting employees based on ability.

However, even as I work at one of these startups myself, I feel that Japanese people are still uncertain about building these new merit-based hierarchies.

I think this stems from the psychological barriers created by the age and experience-based hierarchy mindset that was drilled into us through childhood education, preventing a complete transition to pure meritocracy and results-based systems.

Even after becoming adults and entering society, these time-based hierarchies continue to exist in visible forms in Japan through specific behaviors like "using formal language with older people" and "bowing when greeting."

Because these psychological barriers remain visibly present even in adult society, Japanese people themselves feel uncertain about forming ability-based hierarchies in response to Japan's rapidly changing society. They're confused about how to build groups and organizations.

On the other hand, some Japanese organizations have swung to the opposite extreme, trying to eliminate hierarchy and create completely flat organizations as a reaction to past practices.

However, the flatter an organization becomes—with everyone having equal decision-making power—the more time it takes to make decisions, ultimately slowing down business progress. This complete elimination of hierarchy hasn't fully taken root in Japanese society either.

What Should Japan's Hierarchy Look Like Going Forward?

Regarding "what Japan's hierarchy should look like," my conclusion is that Japanese society as a whole can't form a hierarchy based on consistent, uniform criteria.

This is because in today's world, different organizations require different types of hierarchy to benefit their groups.

For example, startups should form hierarchies based on ability and results to maintain speed. On the other hand, large corporations might need to maintain hierarchies based on years of experience to preserve their existing business relationships—hierarchies that enable optimized communication and rule compliance.

However, Japanese organizations tend to avoid articulating exactly what rules they use to form their hierarchies. This lack of clear communication about hierarchy might be causing confusion within groups.

I think this partly stems from Japanese society's generally negative feelings toward traditional age-based hierarchies, with organizations intentionally avoiding articulation to prevent backlash.

But in rapidly changing times, hierarchy formation methods need to be adapted to the environment with unique policies. To communicate these policies to teams, each group in Japanese society needs to clearly state what rules they use to form their hierarchies.

Hierarchy isn't inherently evil—it's necessary to benefit the group. That's why I hope that Japan's optimal hierarchy solutions will emerge from within Japanese society itself, rather than being imposed from outside.

Thank you for reading.