During a recent trip to Japan I visited Amazon’s offices to have lunch with an acquaintance who has been working there for 1 year and 3 months. He told me that Amazon has expanded so rapidly this past year that he is now in the upper half of a chart which shows all employees ranked by their length of time working for the company.
He also told me that almost all the non-Japanese people working there were, like him, locally hired and that there were hardly any expatriate staff from the US headquarters. I therefore wondered how Amazon HQ could control a subsidiary which is growing so rapidly without any expatriate managers to keep monitor it.
Amazon also tries to minimize the number of processes and procedures it has, in order to maintain the speedy, fast to market, start up mentality it had when it first began over twenty years’ ago.
The 3 usual ways to control overseas operations
In the various multinationals and their subsidiaries I have worked in or with, you can usually find three types of headquarter control. American, sales focused companies tend to control their subsidiaries by setting numerical targets. If the subsidiary employees and managers hit the targets, they get bonuses, if they miss them, they get fired. Many multinationals who are not American in origin use these systems because numbers are easy for everyone to understand, regardless of language.
Another way of managing subsidiaries which both European and American multinationals also use is to ensure compliance through having strong regulations, processes and systems, and clear hierarchical chains of command, so everyone knows who has responsibility and authority for each part of the business.
A third way, which is more common among Japanese companies and also companies such as the German Mittelstand, family owned companies, is “control by the family” – in other words members of the headquarters family are sent out to subsidiaries to monitor what is going on and promote the corporate culture.
My Amazon contact explained that Amazon ensures its employees behave in compliance with Amazon’s core values by having a very rigorous hiring process. Candidates are interviewed several times by multiple employees and asked questions about past experiences, to reveal what kind of mindset they have.
I can imagine, however, that it is difficult for Japanese companies to use this method if their overseas subsidiaries were the result of an acquisition, or if the company has already been operating overseas for several decades. There will already be a substantial legacy of staff who may have rather different values and behaviours to those of the Japanese headquarters.
It would also be a mistake, and damaging to the benefits of having diverse, localised operations that are close to their customers, to impose too rigid a set of behaviours and values on all overseas employees.
Nonetheless, I strongly recommend that Japanese companies who are about to acquire or set up operations overseas ensure they have a clear, globally understandable company mission and values (rinen) and hire or promote their overseas employees accordingly.
This article appears in Pernille Rudlin’s latest book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” available as a paperback and Kindle ebook on Amazon.
For more content like this, subscribe to the free Rudlin Consulting Newsletter.Read More