This chapter presents a model of the Japanese performance management system (PMS), whose strength lies in its ability to support employee and organizational learning. It describes the traditional model and its historical development. The chapter deals with a discussion of procedural justice in the new system, an emerging issue in PM in Japan. This issue has become critical because the modifications in the system of PM just described involve a shift in psychological contract for employees from that based on the long-term relational nature to that based on the transactional relationship between employees and employers. The traditional Japanese PMS is often called "learning-centered," since, throughout the system, employee learning and skill/knowledge acquisition processes are explicitly encouraged. The origins of the Japanese human resource management practices go back to the turn of the twentieth century when Japanese industrialization began to take off and economic and technological advances generated pressure for more effective employment arrangements.