Before making evaluations for the 1996 year-end bonuses, Kato Spring transferred the final decision-making rights on performance evaluations for Katoites to the section manager level.
  The system used at our company consists of nine grades for work skills with section managers rated at grade seven. This means that section managers are now responsible for decision-making regarding performance evaluations of Katoites in grades 1-6. In reality, section managers assume the rights for judging personnel in grades 1-6.
  In a general sense, this probably appears to be a drastic transfer of authority. However, until this time, as is the case of most companies, the salaries, bonuses and promotions had been decided in a system in which the first review was conducted by the section manager, the second by the department manager and the final decision made by the general manager.
  In the new personnel evaluation system, the section managers make evaluations assigning five levels while using the self-evaluation table of the section staff members as a reference. In the near future, it is my intent to have the section managers determine all bonuses for section staff members using their own judgment and resources we assign to each section. Using the new system, section managers will have nearly 20 days to decide the allocations after we assign each section funds.

  This series of aggressive authority transfers had as its aim the implementation of a test in preparation for the division of the company using a Strawberry Corporation-like approach.
  Kato Spring plans to create many companies that have about 50 company members in total. It is also very possible that smaller venture-type companies of about 20-30 people will be established.
  The section manager class, when standing at this sort of frontline position, cannot maintain its energy and devotion to the organization by conducting traditional evaluations and reviews.
  In the previous system, section managers could respond calmly because it was assumed that the department manager would conduct a secondary review and the final decision was left completely to another individual. Consequently, there was no way of answering objections to responsibility that section staff members had. In fact, the section manager could use this multi-layered vertical organization as an excuse to hide from responsibility, saying, "No, I felt this way, but evidently the department manager must have made a different decision." This causes the staff members working with the section manager to lose trust in their superior and results in a situation where it is difficult to exercise leadership. In other words, the negative "Lose-Lose" cycle takes the stage. In such a situation, the associates system can exist in name but cannot be implemented, and would be torn apart almost immediately.