Diversity & Inclusion

Fewer women on the boards of Japanese companies in Europe than in Japan

We’ve revised our Top 30 Japanese companies in Europe again. Where possible we have updated the number of employees, which means the Suntory Group is now in the Top 30 along with Konica Minolta (and Kao and Daiichi Sankyo are out). This time we wanted to take a look at the gender and nationality diversity on boards, both in Japan and Europe, and have discovered that there are actually fewer women on the boards of Japanese companies in Europe than in Japan.

Only two out of 19 (10%) of European headquarter boards of Japanese companies have women on them – Astellas and Suntory (the latter including Makiko Ono, an executive in Suntory Japan) and only 3 of the 14 (21%) UK based Japanese companies we looked at (in cases where the European HQ was not in the UK or there were separate European and UK companies in the UK) had women members – Lucite (subsidiary of Mitsubishi Chemical Holding/Mitsubishi Rayon), Komatsu and NTT Data. Komatsu UK’s female director is Keiko Fujiwara, who is the CEO of Komatsu Europe, in Belgium. This contrasts with 13 (43%) out of the Top 30 companies’ boards in Japan having women directors. In case you were wondering, only 6% of FTSE250 companies have no women on them.

4% of the Top 30 Japanese companies in Europe’s board members in Europe and/or the UK are female
6% of the Top 30 Japanese companies in Europe’s board members in Japan are female
8% of the Top 30 Japanese companies in Europe’s board members in Japan are non-Japanese
16% of the board members of the Top 100 listed Japanese companies in Japan are female
19.6% of FTSE250 board members are female

Around 62% of the members of European and UK boards of of the Top 30 Japanese companies are European, on average. Companies whose boards in the UK and Europe only had Japanese directors were Toshiba, Fast Retailing (Uniqlo), Fujifilm and Sharp. Sharp and Toshiba’s troubles are well known. Fast Retailing recently reported struggles in the US market and falling profits in Europe for Uniqlo, Comptoir des Cotonniers and Princess Tam Tam. Fujifilm has made a remarkable transformation from a B2C camera film to a B2B imaging company but the last set of quarterly results, issued last month were deemed “mixed”.

(Note: only main boards, not executive or supervisory boards were analysed, and company secretaries were excluded)

The full chart is here (highlighted means “above average) and can be downloaded here :Top 30 Japanese companies in Europe board diversity Nov 3 2015

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The Rebirth of the Japanese Office Lady

About 20 years’ ago I wrote an article proclaiming the death of the Japanese Office Lady (OL). The company I was working at, along with many other Japanese companies at the time, had stopped hiring new graduates into the so-called “administrative” track, abolished the OL uniform, and encouraged existing OLs to transfer across to a management track. Future administrative needs would be filled by temporary agency workers.

I was quite pleased about these developments, as the old OL system offended my feminist sensibilities. The companies themselves had ended the OL system more for financial reasons. OLs were meant to join at age 20 or 22 and only stay in the company until their mid twenties, when it was expected they would leave to get married. In the meantime, they cleaned the desks, emptied the bins, made tea for the team, answered the phones and processed the team’s paperwork. By the mid 1990s, however, it became clear that more and more OLs were staying in the company into their late 30s, and due to the seniority-based pay scale, were being paid well over the odds for such basic administrative tasks.

A tough decade followed, for every young Japanese leaving university and trying to find a job, but especially for Japanese women who did not want to join a temping agency. Many joined foreign companies and some braved the management track of mainstream Japanese companies. It was tough for the women who were still in the administrative track too. They often ended up being paid less, as the quasi-management track they had been forced onto was not as seniority based as the administrative track they had been on. Almost all of them were working harder than ever before, as they were now having to manage teams of temporary staff. They had to train a constant stream of new temps, check their work and take the rap for any mistakes the temps made.

I was initially surprised to hear that the administrative track is now being reintroduced at my former company. Apparently the mistakes being made by temps and the strain on the remaining ex-OLs (many of whom who have now taken early retirement) are having a significant impact on the business.

On reflection, it should not have been a surprise. When I conducted a series of customer satisfaction survey interviews with Japanese companies last month, more often than not, the female administrative staff had also been invited to meet with me, and their (mostly male) managers were very careful to ask for their opinion and comments. The Japanese customers expected their criticisms of the administrative capabilities of the supplier company to be taken seriously. Administrative mistakes are not trivial in Japan. Not only are they seen as an indication that there may be problems elsewhere, but there is a view that a small slip can have major consequences.

I was being snobbish in viewing administrative tasks as demeaning, and declaring that it is sexist if women are assigned to such tasks. I doubt I am alone in this prejudice. I wonder how many Western companies would invite their secretaries to participate in customer satisfaction survey meetings.

Diversity on boards in UK and Japan

The UK business media has paid more attention than usual to Japanese business topics, thanks to the new corporate governance regulations that have been introduced in Japan on June 1^st. Corporate governance is still a hot topic in the UK, 23 years on from the Cadbury Report which made similar recommendations to those being adopted in Japan, and has been influential on EU and US regulations since.

External directors are now a standard feature of British boards, but there is still concern that there is a lack of diversity in the membership of the boards of British companies. What we call in the UK an “Old Boys’ Network” still operates in the appointment of board members. It is a natural human instinct to prefer to hire people who are similar to you and many appointments are made through personal connections rather than publicly advertised.

The most recent update on another corporate governance review, the Davies Report of 2011, which recommended an increase representation of women on FTSE 100 (Financial Times Stock Exchange) boards to at least 25% by 2015, was issued in March of this year. Good progress has been made on having more women non-executive, external directors, but the percentage of executive directors who are women is still very low (4.6% for the FTSE 250).

In addition to the “Old Boys’ Network”, boards want to appoint people with a strong track record in a particular industry or who have financial expertise. Women tend to have more varied, generalist careers or are professionals in areas such as HR or marketing. There is still a lack of women rising up through the ranks in traditionally male industries such as IT, banking or engineering.

Of course the whole point of having more diverse boards, with different expertise and backgrounds, is to encourage debate in board meetings and more transparency of information, which is supposed to lead to better governance, innovation and management of risk. Having to explain issues to people who are not expert in your company or industry can help uncover unthinking assumptions and bring fresh perspectives.

Japanese companies in the UK banking and insurance sectors have come under heavy scrutiny from the UK Prudential Regulation Authority recently. The PRA has the right to interview and approve the appointment of directors to financial sector companies, and also to see the “board pack” (documents for the board meetings) and minutes of the meetings.

Newly appointed Japanese directors have found it very difficult to answer the standard PRA question “why did you choose to take up this role?” when in fact they were simply told to become a director by Japan headquarters. Most board meetings in the UK just rubber stamped decisions made through nemawashi outside the meeting, so the board pack and the minutes were minimal, and in Japanese.

As board diversity increases in Japan, hopefully Japanese companies will become more used to providing a greater quantity of information and more transparency about decision making, which will help the boards of their overseas subsidiaries function better too.

This article was originally published in Japanese on 8th July 2015 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 demand too much perfection

Okada Hyogo, senior manager at Microsoft in Singapore, sports what is known in Japanese as the ‘Regent style’ hairdo – apparently named after Regent Street in London, but usually known in the UK as a DA. He is photographed with his quiff, leather jacket and sunglasses for a recent interview with Diamond Online. He has written various articles for the magazine, including one entitled ‘60% is good enough’. The impact of Microsoft on his thinking is clear, in the way he recommends Japanese companies also adopt the “patch” mentality he saw in software development. “Aim for what is feasible, not the best”, was his lesson from his time working for Accenture in the USA.

He echoes a point I often make in my seminars about the Japanese pursuit of perfectionism, which is that the 80/20 rule kicks in when it comes to costs of making an effort. It can take 80% of effort, resources and time to achieve the final 10 or 20% to reach 100% perfection.

This might work in Japan where it is normal to work through the night to achieve “the best” but of course this kind of behaviour is not so well accepted outside of Japan. As Okada says, in some cultures a person who works late is regarded as someone who is not self disciplined. “They have a much stronger sense of priorities than the Japanese do.”

“Japanese are lacking individual ‘core values’. At Microsoft we have 6 core values upon which we base our daily work. They are ‘Willingness to take on big challenges’,’Integrity’, ‘Openness’, ‘Constructive self criticism’, ‘Accountability’ and ‘Passion’.” Akiyama Susumu, the interviewer and President of Principle Consulting Group responds that it helps to define your own core values if you interact with people who are different to you.

As for being able to speak English, Okada believes it’s not enough by itself – an open and forward looking mindset is needed. “You need to be interested in the other person, and be prepared to engage in discussion.” Akiyama says it’s tempting to become silent if someone else in the meeting speaks better English than you do”. Okada responds that he got over his own English complex when his boss said “you already speak English. What’s important is knowing what you want to say, and how you want to progress the discussion.” Okada’s recommendation, to those who are not confident about their English is to get to a meeting 10 minutes early and greet the other participants as they arrive with “nice to meet you!” or “Good morning!” – that way you get warmed up for communicating and also you ensure that you have a presence at the meeting.

Even in teleconferences he recommends getting a question in early like “when can I expect to finish this meeting?” as a warm up, otherwise you end up not saying anything. For presentations he uses physical warm ups like a few squat thrusts and also practicing his “Rs”.

Another tip for meetings is to get near the whiteboard and offer to write up the agenda and minutes on it. “That way you look intelligent and hardworking!”

He also recommends saying “Let me finish” and using your hands to signal this. “Japanese tend to preface their requests too much”.

He finishes by saying that Japanese companies don’t have a very good image in Singapore as employers, and this has an effect on the brand too. Japanese employers are seen as only promoting Japanese people, and demanding a lot of unpaid overtime. Products have too many unnecessary features which only appeal to Japanese, rather as Japanese companies unthinkingly promote uniquely Japanese ways of working – such as chourei (daily morning team meetings). There is not one Japanese company in the Singapore Top 100 employers chosen by students.

Teams and orchestras

Shinko Hanaoka, the Japanese cellist, spoke today to the Jiji Press Top Seminar. I’d just been talking to a Japanese ex-colleague about European and Japanese attitudes to teams, so her description of the differences between Japanese and British orchestras struck a chord. Apparently in Japan, when there is a vacancy in an orchestra, applications are invited and there is an initial selection based on the applications. Those selected are called for audition and the person who plays the best in the audition is selected. The UK system is similar, up to the point of the audition, but apparently several people are shortlisted after the audition and then called, randomly and without much warning, to play in concerts, as part of a trial period, which can go on for years. They are compensated the same way a contract musician is paid, but they are under scrutiny not just for their ability to play, but their sociability, flexibility etc. In other words whether they fit into the team.

I suppose in the Japanese orchestra case, there is an assumption that it goes without saying that the new member will make every effort to fit in the team. It’s the training every child receives from kindergarten onwards. However, Hanaoka herself admitted she found the Japanese orchestra “gyoukai” (industry, trade, profession) very oppressive and full of rules and expectations about how she should behave.

She wasn’t totally positive about the British method either – as clearly selection based on personal characteristics rather than musical ability is liable to prejudice and political considerations. She confessed she did sometimes use the excuse of being a foreigner to get out of some of the more “gyoukai” like aspects of the British musical scene. (The “freedom of a foreign life” as I have noted previously)

Even once she succeeded in the trial period, she found it impossible to get the Royal Philharmonic to do the necessary to get her a visa, so had to continue her studies in order to qualify for a student visa, and then finally permanent residency. She said it was unsurprising that she was one of very few foreigners in the orchestra, in contrast to continental European or American orchestras.

A further point she made, familiar to anyone with Japanese customers, is that Japanese audiences are way more fussy than British ones. “Maniacs” she said (meaning maniacal in the depth of their knowledge, rather than nuts), whereas British audiences mostly just wanted to enjoy themselves and were far more casual.

Category: Diversity & Inclusion

Fewer women on the boards of Japanese companies in Europe than in Japan

The Rebirth of the Japanese Office Lady

Diversity on boards in UK and Japan

Japanese companies demand too much perfection

Teams and orchestras

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