The seniority principle has often been described as a key ingredient in the traditional Japanese HRM model. However, increasing numbers of testimonials in the literature report that this practice is dramatically declining in significance. Results of this empirical study indicate that: 1) compared to the past, the seniority principle is significantly losing importance for promotion and compensation decisions; 2) this is a trend likely to continue into the future; 3) the seniority principle is declining more than any other Japanese HRM practice; 4) the American model serves as an important source of inspiration in introducing a more performance-oriented system; 5) when compared to western countries, however, seniority is likely to remain of importance. Suggestions are put forward as to how a performance based promotion and compensation system might suit the specific Japanese context better than western practices do.
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