Pernille Rudlin - Rudlin Consulting

About Pernille Rudlin

Pernille Rudlin was brought up partly in Japan and partly in the UK. She is fluent in Japanese, and lived in Japan for 9 years.

She spent nearly a decade at Mitsubishi Corporation working in their London operations and Tokyo headquarters in sales and marketing and corporate planning and also including a stint in their International Human Resource Development Office.

More recently she had a global senior role as Director of External Relations, International Business, at Fujitsu, the leading Japanese information and communication technology company and the biggest Japanese employer in the UK, focusing on ensuring the company’s corporate messages in Japan reach the world outside.

Pernille Rudlin holds a B.A. with honours from Oxford University in Modern History and Economics and an M.B.A. from INSEAD and she is the author of several books and articles on cross cultural communications and business.

Since starting Japan Intercultural Consulting’s operations in Europe in 2004, Pernille has conducted seminars for Japanese and European companies in Belgium, Germany, Italy, Japan, the Netherlands, Switzerland, UAE, the UK and the USA, on Japanese cultural topics, post merger integration and on working with different European cultures.

Pernille is a non-executive director of Japan House London, an Associate of the Centre for Japanese Studies at the University of East Anglia and she is also a trustee of the Japan Society of the UK.

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Here are my most recent posts

First decrease in Japanese nationals living in UK since Lehman Shock

The number of Japanese nationals resident in the UK fell by 4.5% in 2016, from 67,997 in 2015 to 64,968 – the first time since 2008-9, when the Lehman Shock hit and numbers dropped from 63,526 to 59,431.

It’s difficult to avoid concluding that the Brexit referendum vote had an immediate psychological impact along with the beginning of a renewed crackdown on non-EU migration. I expect the downward trend to be intensified in 2017-8 as it has become much more expensive and difficult to bring in Japanese expatriate staff from 2017. The non-EU immigration cap has been hit for the third month running in February 2018. It is estimated that the cost of bringing in a Japanese expat has increased from £2151 to £7174 in 2017 (and might double again in later years) after the introduction of the immigrant skills charge of £1000 per year in April 2017. The charge to use the NHS is proposed to rise from £200 to £600 over the next couple of years.

Given that some Japanese companies have hundreds of Japanese expatriates in the UK, this is a significant cost, even though it does not seem to have deterred more non-EU migrants from coming to the UK in 2018 compared to 2017.

Delving further into the Japan’s Ministry of Internal Affairs and Communication’s Statistics Bureau’s statistics, it is clear that other European countries are still seeing significant rises in Japanese nationals as residents – Sweden has seen an increase of 8% from 2015 to 2016, the Netherlands a 7% rise and the two largest Japanese populations after the UK, Germany and France have also seen 3-4% rises, to 44,027 and 41,641 respectively. Belgium and Russia are the only two other countries to record a decrease in Japanese nationals, of 9% to 5,707 and 4% to 2,650 respectively.

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Global Japanese companies have a diversity problem in their Japan HQ (and it’s not just gender)

Mid career hiring seems to me a good indicator of the degree of acceptance of diversity in its broadest sense, and Toyo Keizai obviously agrees, as they have published a ranking showing the percentage of employees in Japan who are “graduate hires” in the total year’s intake as part of their Corporate Social Responsibility data publications.

Companies in our EMEA and UK Top 30 largest Japanese employers who are also in the Toyo Keizai rankings of companies with the highest proportion of Japanese graduate hires are therefore in a rather paradoxical position of having a high number of non-Japanese employees in their overseas subsidiaries, being managed by a very traditional Japanese group of employees in their Japan headquarters.

Most of the companies in these categories are trading companies, banks and major manufacturers – the latter two having substantial domestic branch networks or domestic manufacturing and markets to cater for I suppose. They include:

NYK 65 graduate hires in April 2017, 2 mid career hires in 2016
NTT Data 385/13
Canon 475/15
Toyota 1935/98
Sumitomo Corporation 157/8
Itochu 149/12
Marubeni 135/11
Sumitomo Mitsui Financial Group 1347/115
Mizuho Financial Group 1394/175
Toyota Industries 284/27
MUFG 1206/111
Dentsu 145/19
Fujitsu 740/110
Mitsui 180/30
MS&AD Insurance 1183/254

No sign of Mitsubishi Corporation in the rankings – which may be due more to non disclosure of data rather than not being in the top 150. When I was working at Mitsubishi Corporation, we used to refer to the hiring of similar Mitsubishi graduate types every year as having led to a “Kintaro ame” situation in terms of diversity – Kintaro ame (Kintaro sweets) are rather like British sticks of rock, the same wherever you cut through them.

Japan has not faced up to the need for re-training in an ageing society

Japan’s population has already peaked at 127 million, and on current projections will be under 100 million by 2053, with around 1 in 4 people aged over 75 and under 60 million by 2100, by which stage 1 person in 2.5 will be elderly. The Nikkei Business magazine has a special feature on what this means for Japan and how to make sure this future is a happy one. Japan is of course the canary in the coal mine for other developed societies facing similar demographic changes, such as Western Europe, but, so far, does not seem to be taking the route that Western Europe has, of allowing immigration to rebalance the demographic trends.

Happy vs Bad scenarios

The “happy scenario” is where the elderly find jobs as “cloud workers” doing subcontracted administrative work for their local authority, live in affordable social housing and their pensions can allow them a comfortable lifestyle. They might accumulate points from their work which go towards healthcare and social care.

The “bad scenario” is where salaries are only just enough to make ends meet and if you are living on your own, aged 80, you find it hard to do physical work. Social infrastructure has not been renewed, and living conditions are worsening. People are fleeing the suburbs in search of a cheaper cost of living. Intergenerational wage gaps have not been adjusted, and this is having an impact on pensions. Low wages have led to a chronic labour shortage.

The new multistage life and career

The Nikkei then goes on to interview Linda Gratton, of the London Business School, regarding her concept that our lives will no longer be three distinct stages of education, work and retirement, rather multistage, with a time of retraining, which may result in no longer working for an organisation as an employee.

A rather depressing graph accompanies this, showing that Japan has the lowest number of people over 25 in further education (2.5%) compared to the OECD average of 16.6% – only the Netherlands has a similarly low rate, and Germany, the UK and Spain are also below average.

Japanese corporate training budgets are a tenth of Germany’s

Japan’s generally high level of education might explain this, but another chart also causes concern, comparing Germany to Japan in terms of corporate training. Siemens spends over $1100 per employee per year, compared to $130 average spending on training by Japanese companies on their employees. Training in Germany is for the whole industry (presumably they mean Germany’s national apprenticeship schemes) whereas for Japanese companies, training is only offered to employees. The content of the training in Germany is transferable skills, and in Japan it is only useful for that company or industry. German training includes e-learning via smartphones and PCs, whereas in Japan it is “on the job training” and classroom based training.

Actually I have noticed more e-learning in Japan too, although it is mostly for internal compliance purposes. Despite the fact that I have recently created some e-learning, I am not sure it is a sufficient alternative to class room based training, particularly for soft skills. But certainly if we are thinking of retraining people in skills needed for becoming “cloud workers” then it will have an important role to play. Indeed the e-learning I have developed in Japanese is specifically aimed at Japanese people working in virtual global teams.

Japanese firms’ re-training, re-employment provision

The final part of the feature details a survey of various listed Japanese companies’ employees about their systems for allowing second jobs, early retirement, individual education and re-employment. 62% of Japanese companies allow employees to have second jobs, usually with some restrictions. 68% have an early retirement scheme, for 44% of those, it kicks in at age 50, 29% from age 45 and 12% from age 40 and also age 55. 52% do not have any support system in place for re-training or overseas study, although some do allow time off for study at an employee’s own cost. 80% of firms have a re-employment scheme for people who have left the company, but with various conditions, such as they should have left the company in order to bring up a family, or to look after elderly relatives, or to accompany a spouse when they had to move for work.

Nikkei’s Business’s message to Japanese companies is clear – for a happy future society, they need to step up their support for older employees to develop their second careers.

Nidec’s Nagamori on the root causes of Japanese corporate scandals.

The founder and President of Nidec Corp, Shigenobu Nagamori has been high profile in the Japanese media (again). As well as a long interview in Diamond magazine about why all 57 of his acquisitions (many in Europe) have been a success, he gives some punchy analysis in his final column for the Nikkei Business magazine on what the root causes of the succession of scandals coming out of corporate Japan.

“It is the top management’s fault if bad news does not reach them. If there is something wrong with the production process or sloppiness in quality control, this is a matter of life or death for a manufacturer. That such important information is not being communicated is because the management is not going to the genba (where the action is) and seeing what is going on for themselves.

4 root causes of scandals at the genba

Nare (becoming used to something) Thinking that a certain level of irregularity won’t be a problem, getting accustomed to it.
Amae (being indulged) – believing that you won’t get found out anyway
Tiredness – when the cost price seems to have reached rock bottom or kaizen has been continuing for a while
Takotsubo (octopus pot – for more uses of this analogy, see our post on octopus appointments) – silos where a problem in one unit is hidden and not communicated to other units

This happens because managers are not ensuring a sense of urgency in the genba. This doesn’t mean they have to keep pressurising employees. They should be making frequent efforts to strengthen and pull up the genba. That’s why they should enter the genba themselves and see for themselves what is going on in R&D and manufacturing, sales. This will naturally lead to a sense of urgency.

Of course managers set targets, but if they don’t know the genba, then these are just words, and feel very distant to the genba.

The need for “hands on”, “micromanagement” and “making responsible without giving away responsibility”

Hands on means the genba solves problems with the management alongside. Not just throwing problems at them.

Micromanagement is that managers make decisions about all the issues in the genba. When I acquire a company that is in trouble, in order to reconstruct it, I check purchasing for even 1 yen. Some people say this will undermine the ability to think for themselves but it’s quite the opposite. It is to make the employees think, come up with suggestions and work alongside managers to review it. Not just get told, in a one way fashion.

“Making responsible without giving away responsibility” means that I delegate authority, but I don’t just leave people up to it. Otherwise the genba logic just becomes stronger and they fail to see what is appropriate overall. So delegate, but regularly check, very thoroughly.

The importance of developing generalists

It’s also important to develop executives. Although there is a tendency in Japan at the moment to reject generalists, it’s no good if someone only knows one business area and has no idea about other parts of the business. While people are young, they should experience management in different divisions in order to become proper executives.

That’s why I am always visiting our subsidiaries around the world. We have 300 companies and over 100,000 employees so I can’t do this by myself. So I get other people like our CSO (Chief Sales Officer) to travel around too. I am visiting somewhere pretty much every week. If managers had this attitude, the morale of the genba will also improve. You cannot take it easy.

Increased pressure felt by Japanese to speak English at work

36.3% of Japanese people responding to a Nikkei Business survey in November 2017 say that they have felt a dramatic increase in the need to communicate with non-Japanese people at work or because of work in the past few years. A further 32.1% have felt a gradual increase.

Only 18.9% say that English has become or may become the official or unofficial corporate language, however. 39.2% say there is a connection between performance and being able to speak English and a whopping 82.4% say they feel the need to improve their English speaking ability. The main reasons chosen for feeling this way are:

be able to do my job better (>70%)
improve my relationship network (>40%)
increase my career choices (>40%)
be able to work overseas (>30%)
improve my performance evaluations (<10%)
look as if I’m high potential (<10%)

The article makes an interesting point that those Japanese over 50 are actually quite good at English, often having worked overseas or been involved in export related jobs and benefitted from corporate budgets for English classes. Those in their 20s take it for granted that they need to be able to speak a good level of English, as this was important when they were on the graduate recruitment circuit.

So the generation that is suffering the most are those in their 30s and 40s, who did not have a chance to work overseas or study overseas in the Lost Decades of the 1990s and 2000s and also suffered from budget cutbacks on language training.

The positives and negatives for investors of local pride and identity

I was working in Catalonia just before the referendum there in 2017 and shortly after that I was in the North Rhine -Westphalia area in Germany, where people were still digesting the results of the German elections. These trips, as well as the impact of Brexit in the UK, have made me aware of how important local – not just national – identities are for businesses to thrive.

The majority of Japanese companies based in Spain are in the Catalonia region, and this choice of location is not surprising as Catalonia has been one of the most prosperous and industrialized areas of the country, offering easy land access to France and several international ports. It turns out that one of the factors behind the Catalan independence movement is a resentment amongst the people of the region that their taxes are being transferred to prop up poorer parts of Spain.

The freedom of capital, labour, goods and services in the European single market creates competition between not just countries but also regions within those countries to attract investment from business. The European Union tries to prevent this turning into a “race to the bottom” in terms of cost of labour, tax rates and cost of capital by having tough regulations on labour standards, cracking down on tax avoidance and limiting how far member governments can subsidise business investment.

Before 2008 the system seemed to work well – labour flowed to the more prosperous parts of the EU where there were job shortages and capital flowed from those regions (and from Japan) to regions where the cost of labour was lower.

In a free market, this should have eventually led to an equalization of living standards across the European Union. However, the Lehman Shock, combined with the influx of new member countries from Eastern Europe meant that capital flows returned to the safer havens of Western and Northern Europe and workers in southern and eastern Europe left their home towns to find work elsewhere in greater numbers than before.

The tension this caused is particularly apparent in Germany. The anti-immigrant Alternativ fur Deutschland had very little support in the recent elections in the prosperous North Rhine-Westphalia region – which has one the highest concentration of Japanese companies in Europe. But it had strong support in former communist eastern Germany, where the continuing gap in living standards with the west causes resentment, fuelled by worries that immigrants from other eastern European countries are further eroding wages.

For Japanese companies considering investment in Europe, local sensitivities add another layer of complexity in choosing a company to acquire or a locational base. However, if Japanese companies show strong local commitment, the local employees will respond with equal loyalty and commitment too. This is very clear in the pride and loyalty of employees at Japanese automotive plants which have been operating for over 25 years in some of most deprived parts of the UK, who have expressed their determination to succeed despite Brexit.

This article was originally published in Japanese in the Teikoku Databank News on 8th November 2017 and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

Profitability of Japanese companies in the UK lags rest of EU, pessimistic about 2018

The lag between the UK’s growth rate and the rest of the world noted by Christine Lagarde today has also been felt by Japanese companies in the UK. According to the recently published JETRO survey on business conditions of Japanese companies in Europe, whereas the percentage of Japanese companies in the EU reporting profitability has increased year on year, reaching 75% overall this year, this breaks down into 71.6% for UK companies and 76.6% for other EU countries. This might only be a 5% gap, but business sentiment is also taking a hit – with the UK coming second from bottom amongst EU countries in terms of expectations of profit growth for 2017-8, beaten only by the Czech Republic.

As for Brexit contengency plans, of the 952 responses received, 245 were from UK based companies. Around 25% of these said they were currently reviewing or considering a review of their location in the UK. Of these, 60% are reviewing the relocation of their sales functions, and 50% looking to review the location of their regional headquarters functions and 20% are looking to relocate manufacturing. Over 80% said they were preparing or considering preparing to partly relocate to another EU country, and 20% were looking to completely relocate. The top 2 countries cited as potential relocation destinations were Germany (23 responses) and the Netherlands (6 responses).

Nearly half of UK based Japanese companies were expecting a negative impact on their business from Brexit, citing customs tariffs, securing human resources and changes to regulations and legislation as their main areas of concern.

On a more positive note, the new Economic Partnership Agreement between Japan and the EU is seen as being a major advantage for their business by over half the respondents, particularly for companies based in Central and Eastern Europe. Even UK based Japanese companies did not see as much merit in a UK-Japan EPA however. The most selected reason for welcoming the EU-Japan EPA was “tariff reduction or abolition for imports from Japan” – which is mostly in the automotive sector, so I guess this means more imports to Central and Eastern Europe of Japanese cars and automotive components can be expected.

The biggest operational challenge was seen as securing human resources – for more than half of the companies based in Germany, the UK, the Netherlands and Central and Eastern Europe, again echoing recent news about labour shortages in the UK – both in terms of skills and incoming EU migration. Labour shortages outstripped last year’s biggest operational challenge of “European political and social conditions” – but the latter challenge did not fade away and in fact concerns strengthened slightly, thanks to worries in Spain regarding Catalonian independence, and in the UK regarding Brexit negotiations.

Over half of respondents expected to expand their business, over 70% in the case of Japanese companies in Italy and Poland. So, happy days if you’re an automotive sector worker in Poland.

Giving feedback is not just a language issue

There has been a marked increase in the number of clients asking me to provide training for Japanese expatriate managers in Europe on giving feedback and performance appraisals. I’d like to think this is because our marketing is having an impact – but on talking to the HR departments of our customers, it seems they have become aware of an increasing number of workplace conflicts between Japanese managers and their teams.

European employee dissatisfaction with Japanese managers’ feedback style is not a new issue. Complaints usually include that no feedback is given, or only negative or quantitative feedback. I usually explain that giving feedback is not as embedded in Japanese workplace culture as in Europe. Also, Japanese employees are used to working collaboratively as a team rather than having individual performance evaluated. The best employees are deemed to be the ones who look to improve themselves without having to be told.

I remember when I was working in Japan in the 1990s, many Japanese companies started introducing seika shugi (performance based systems) but often not very successfully. Evaluating individuals ended up destroying the collaborative, knowledge sharing work environment that is one of the strengths of the Japanese workplace.

The Japan HQ appraisal systems that have developed since the 1990s are much more quantitative than European systems. The manager gives numerical scores not just for performance and achievement of objectives, but also of behaviours, mindsets and competences. In Europe, we usually just give qualitative assessments of the latter, such as “meets expectations” or “exceeds expectations” or “below expectations”.

I suppose the Japanese quantitative approach seems more objective, and less personal. Numbers can be analysed across the whole company, and are not subject to interpretation or language barriers.

European managers use qualitative appraisals to stimulate a dialogue about what expectations they have for each individual and then come to an agreement on development opportunities for individual employees in terms of support that they need from the manager, training needs and potential career paths.

The norms of the workplace are rooted in our educational systems

My experience of the Japanese education system is that exams are of factual knowledge and knowing how to do something, often using multiple choice tests. Such exams assume there are clear right and wrong answers.

European education focuses more on critical thinking and understanding the reasons behind something. Exams are essay based, even in science. Scores are partly on getting the facts or the methodology right, but also on the quality of your arguments and the evidence you bring to prove your point.

Consequently, European employees do not unquestioningly accept numerical scores for individual behaviours, mindset and competences. They expect a manager to set clear expectations, give regular feedback and then be able to explain, with evidence, why the employee has met or not met them when challenged. The millennial generation is particularly demanding in this respect. No wonder Japanese managers need training on this – it’s not just a language issue.

This article was originally published in Japanese in the Teikoku Databank News and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

Japanese companies should put their hard Brexit contingency plans into action now

“Don’t give up on expressing your concerns to the British government, but also start putting your contingency plans into action now” was the response from Haruki Hayashi, CEO of Europe & Africa for Mitsubishi Corporation to a question at the end of a lunch seminar in London I attended earlier this month, along with 150 mostly Japanese business people. The question had been “if we won’t know until October 2018 the likely shape of the agreement between the UK and the EU, won’t it be too late to put our contingency plans into action by then, in time for March 2019?”.

To another question regarding the possibility of a second referendum, Hayashi responded – “however desirable, might it not have the same result? And aren’t the British too proud to have a second referendum?”

Hayashi’s speech was a geo-political, economic and risk analysis of the impact of Brexit. He started by hinting that the meeting between Ambassador to the UK Tsuruoka (who was present at the lunch) and the Japanese Chamber of Commerce and Industry in the UK (JCCI UK) that morning had been encouraging – that the ambassador said Theresa May’s visit to Japan had been fruitful in the sense of being a reaffirmation of a common vision on security, economic issues and global partnership and also that there was clear agreement that the EU Japan agreement would be the basis for a quick agreement between UK and Japan.

But then he shared a classic Mitsubishi Corporation political (including security, business environment) risk versus economic impact matrix, plotting the key countries in the EU along with Japan. Unsurprisingly, he predicted the UK economic impact to decline and political risk to increase from its current position clustered with France, Germany, Japan, Italy, Spain and Poland.

“London is the UK”- and up until now, the UK was the EU for Japanese expats

Nonetheless, from Japan’s perspective, the UK is currently so dominant in terms of Japanese presence in the EU, it will take a while for this to unwind. I hadn’t realised quite how dominant in terms of where Japanese themselves are located – there are around 207,000 Japanese living in the EU, and around a third of those are in the UK, with 90% of those in England and over half in London. “London is the UK for Japanese” said Hayashi. There are around 1000 Japanese companies in the UK, around a third of them are members of the JCCI UK. This represents 15% of the 6465 Japanese companies in the EU, which is not far from the 16% of EU GDP that the UK economy represents or the 13% of the population of the EU that the UK represents.

But as I have blogged elsewhere, it is the size and function of these Japanese companies, and also I now realise the density of the Japanese expatriates in them, which is where the UK has been dominant – many of the Japanese companies in the UK are the regional headquarters, and most of their Japanese expatriates are located there.

The UK also took the lion’s share of Japanese investment into the UK. Hayashi pointed out here was a big increase in Japanese acquisitions in the UK from 2010, particularly in 2016, with Mitsui Sumitomo Insurance acquiring Amlin and Softbank acquiring ARM (although I see the latter as an investment rather than an acquisition in the sense of integrating or accessing a market).

Japan’s soft power – more British visit Japan than Japanese visit the UK

Japan’s soft power in the UK is very apparent too – Hayashi listed up all the British brands that aren’t Japanese, but are Japanese influenced, like Yo! Sushi, Wagamama, Wasabi, Itsu and Superdry. And I can testify to his point that the Mitsubishi Corporation sponsored Hokusai exhibition at the British Museum was completely sold out. More British people now visit Japan than Japanese visit the UK – the cross over being in 2011 – 292,000 visited Japan last year, 75% of whom were tourists, whereas Japanese visitors have been at a fairly stable 220,000 to 240,000 a year to the UK. And British tourists spend more than Chinese tourists – because they stay longer and spend more on accommodation.

Japan’s voice is being heard more than a few years’ ago

Hayashi pointed out how the share of global GDP has shifted over the decades from the traditional West to China and India, and that EU integration seems to be losing pace. Japan can take leadership, to continue to support globalization and rebuild it to include China and Russia. Hayashi says he was initially rather embarrassed at the coverage his comments about Brexit got in the Guardian newspaper, but now he thinks it was fair, and that as British people do read the newspapers, it’s important for Japanese companies to have their voices heard in the media – for which they need to have a focused message. “Write to UK ministers about your concerns. Don’t give up. Start now”.

Pernille Rudlin interviewed by BBC on UK trade delegation to Japan and Brexit

Pernille Rudlin is interviewed by BBC World Service Business Matters on Theresa May’s trade delegation visit to Japan and the likelihood of being able to get any kind of commitment to a trade deal. You can hear it or download it here There’s a clip in the introductory news headlines and the actual piece starts 6 mins 38 seconds in on the podcast, 3 minutes 50 seconds in if you are listening to the streaming version.

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