This project proposes an empirical study to compare how American and Japanese firms are redesigning their employment systems to address downsizing. The most significant indicators for predicting the future form of the Japanese organization and its competitiveness, I argue, lie in mechanisms for reducing the work force and reducing costs among remaining employees. As such, the project focuses on early retirement and performance appraisal as two employment systems that characterize work force reduction and productivity maximization. These two changing employment systems highlight how the current economic recession is challenging many of Japan's white collar employment practices for the first time since the onset of the "economic miracle".