In Japan, the labour force is shrinking and there is high competition for available recruits and their employment expectations are rising. Further foreign owned businesses, foreign investment, foreign customers and suppliers are giving exposure to Japanese traditional firms and employees to Western practices. However, there is inconsistent evidence as to how much Japan has shifted from its traditional performance management practices towards Western styles. Existing research has focused on formal policy rather than actual practices experienced by employees. Japan's aging workforce, compounded by shrinking numbers of youth, is leading to a greater reliance upon women and non-Japanese workers who represent new challenges for Japanese firms. In this paper a total of 89 cases from interviews were collated from across multiple organizations and organizational layers to explore both policy and actual practice. We found evidence for an emerging dual-track system, with traditional Japanese practice for permanent generalist employees, and Western performance management practices for contract specialist employees. We also categorized companies into four types, which differed in the proportions of generalists and specialists used. These types are the traditional Japanese with generalists, the Western type with specialists, and international hybrid and new economy Japanese firms using variable mixtures of generalists and specialists. Models are explained with illustrations.