Category: Human resources

Mitsubishi Corporation – a microcosm of the challenges facing Japanese business

The death of the Japanese trading company and the “keiretsu” (company grouping) model has been repeatedly announced over the nearly thirty years since I started working for leading trading company Mitsubishi Corporation and researching their history. But when the Nikkei newspaper runs a three part series on whether Mitsubishi Corporation’s business model is bust, (as they do regularly) it’s worth a look, as Mitsubishi Corporation’s doings are closely watched by the rest of Japanese business.

Digital speed

Part one of the Nikkei series deals with the digital revolution and how it might disintermediate middlemen like Mitsubishi Corp. It notes that Mitsubishi Corp is likely to announce a record profit for 2018/9, but calls Mitsubishi Corp’s legacy a “heavy burden” in trying to find a new digital way to do business.

It looks at how young Mitsubishi employees are scouring Shanghai and Guangzhou for new technologies in convenience stores that they can bring back to Japan.  Mitsubishi Corporation turned Lawson, a convenience store chain in Japan, into a fully owned subsidiary in 2017, partly in response to the losses made on its traditional commodities trading business. But convenience stores themselves are now being threatened by Amazon and China’s Alibaba.

In the mid term plan announced last autumn, Mitsubishi Corp set up a special cross-company structure to look at communications and data [pretty sure we had something like that when I worked there 25 years’ ago, but anyway] and appointed an executive from the energy division (one of the traditional powerful factions at Mitsubishi Corp) as Chief Digital Officer.  “Other trading companies are not our competitors any more” says a senior Mitsubishi Corp executive.  Instead they are looking at SoftBank, who have double the profit and double the share price of Mitsubishi Corporation – a reverse of 10 years’ ago.

The concern, as with so many older Japanese companies, is the speed of change. President Kakiuchi syas he wants to decide within 3 years how to participate in the digital economy – but is that fast enough, the Nikkei asks.

The Three Diamond brand

“Mitsubishi Heavy Industries can fix it by themselves” said a senior executive at Mitsubishi Corporation in September 2018. A subsidiary of Mitsubishi Heavy, Mitsubishi Aircraft Corporation was facing delays in developing its Mitsubishi Regional Jet and needed further investment. The main branches of the Mitsubishi Three Diamonds, the core of the Friday Meeting are Mitsubishi Corporation, Mitsubishi Heavy Industries and MUFG Bank.  It was usual in the past for Mitsubishi Corporation to come to Mitsubishi Heavy Industries’ rescue [often grudgingly I would say] but this time they did not step in.

President Kakiuchi says Mitsubishi Corporation’s relations with other Mitsubishi companies are “no different from with normal independent companies” and has been reducing cross shareholdings.

The Mitsubishi Motors factory which started production in Indonesia in February 2019 of the Nissan Livina also illustrates how ties are weakening.  The factory is a joint venture between Mitsubishi Motors and Mitsubishi Corporation. Mitsubishi Motors was originally an offshoot of Mitsubishi Heavy Industries, and Mitsubishi Corporation has been a frequent partner either in dealerships or production, but Mitsubishi Motors turned to Nissan for investment when it was hit by a fuel emissions scandal in 2016 and is now in a triple alliance with Nissan and Renault.  Up until then, the Mitsubishi group had always bailed it out, but repeated scandals meant they felt their fingers had been burned too often.  “To be frank, we have no role to play in this” said a Mitsubishi Corporation executive on the arrest of Ghosn, even though Mitsubishi Corporation had increased its investment in Mitsubishi Motors from 10% to 20% in 2018.  Mitsubishi Motors was selling around 1.2m vehicles a year, and the view was it had to enter an alliance, manufacturing 100 million a year to survive.

Chiyoda Corporation, a spin off from Mitsubishi Oil, asked Mitsubishi Corporation for financial support last year on a loss made on a US LNG plant construction joint venture. The President of Chiyoda Corporation, Masaji Santo, is a former Mitsubishi Corporation employee.  Mitsubishi Corporation was not only the lead shareholder in the LNG plant but was going to be a customer of the LNG plant, so insisted on a low construction cost, which was resulting in Chiyoda making a loss.  President Kakiuchi has said “we will do what we can to support” but is still considering the pros and cons.

Retaining young employees

“I didn’t want to feel regret” said a young employee in his twenties, who left Mitsubishi Corporation after a few years, to join an IT company, citing the difference in the speed of decision making between the two companies.  Mitsubishi Corporation has always been one of the favourites for the elite graduates of Japan, but recently it has dropped in the popularity rankings for Tokyo and Kyoto University graduates, losing out to foreign consultancies like McKinsey.

Graduates who want to make a difference quickly are avoiding trading companies, experts say. One reason is the continuing seniority based promotion system. It took around 20 years to become a general manager until recently, but now Mitsubishi Corporation has reformed its personnel system for the first time in 20 years, to allow capable employees to take on responsibility regardless of age.  Performance based systems and evaluations have been introduced at certain management grades, setting compensation on complexity of the job role and results. Young employees are polishing their management skills with overseas postings.

The Nikkei cites the example of a 33 year old employee posted to the Cote D’Ivoire, who started a solar panel energy project. A Tsukumo Fund has also been set up, to invest up to Y500m in any ideas that employees have which pass certain criteria, even if they don’t have their boss’s approval.

This last point is key to me – it was always possible to have a lot of autonomy, become a manager overseas at a young age and start new projects at Mitsubishi Corporation if you were capable enough, but you needed your manager and the rest of the hierachy’s support – and that took a lot of time.

As the Nikkei says, Mitsubishi Corporation is a microcosm of the Japanese business world. The lifetime employment, seniority based promotion system worked well in the post war era, but now with an ageing, shrinking workforce, companies have to become more flexible to attract young people and encourage innovation.

 

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5 types of Japanese colleagues who are “workstyle reform” blockers

I was surprised to see this explanation of  five generations of “workstyle reform” blockers in the Nikkei Business magazine came with a big red caution notice to readers not to take offence. The categories are not to be taken as hurtful stereotypes but based in research, and do not apply to all people of a particular age group, they explain.

So with that in mind, here’s a precis of the 5 types identified. Even though I’m not Japanese, I’m afraid I do recognise aspects of myself in the “middle manager” category, and am trying not to take offence. Although some of the characteristics are obviously derived from each age group’s experiences of the Japanese domestic economy and society, I am also reminded that there is plenty of evidence each generation around the world has complained about the other generation for the past thousand years or more.

1. The Veteran

Born between 1947-1951, so 66-71 years’ old

  • Work comes first
  • Believes in the virtue of hardship
  • Over strong sense of competition
  • Clings to past experiences of success
  • No intention of changing how they work
  • Gets angry if their way of working is rejected
  • Will oppose competitors’ opinions regardless of content
  • Caught up with “how things were” in the past.

2. The Executive

Born between 1952-1960 so 57-66 years’ old

  • Don’t rock the boat – doesn’t want to challenge
  • Laissez-faire
  • Always talks about “ideally”
  • People are people, I am what I am
  • Rather than change workstyle, is interested in what happens after retirement
  • Uninterested in reform, regardless of content
  • Just wants results, doesn’t make concrete proposals
  • Won’t listen, as retiring soon anyway

3. The middle manager

Born between 1961 and 1970, so 47 to 57 years’ old

  • Superficial
  • Thinks too highly of self
  • Extremely hedonistic
  • Sees everything in cost/benefit, mercenary terms
  • Reform should be done cheerfully, enjoyably without trying too hard
  • Won’t do it if not fun
  • Will oppose anything which increases own workload
  • Tells everyone to do their best and doesn’t do anything themselves
  • Will change the content of any reforms on a whim

4. The shop floor leader

Born between 1971 and 1986, so 31-47 years’ old

  • Pessimistic
  • Not good at interacting with other people
  • Prioritize risk avoidance
  • Strong sense of resignation – “they won’t understand”
  • “If this reform fails, there is no future for me”
  • Won’t promote reform if don’t trust the company
  • Too busy watching others’ reactions to say own conclusions

5. The staff member

Born between 1987 and 1994, so 23 to 31 years’ old.

  • Little sense of crisis
  • Not good at making an extra effort
  • Prioritizes personal life
  • Everything in moderation
  • “Is reform really necessary?” Won’t do it unless feels it’s necessary
  • Let other people take up new challenges or jobs requiring some thought
  • No empathy with the reasons behind the reforms
  • Doesn’t take the company so seriously, ignores directions

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Which Japanese companies have the most non-Japanese employees?

There are more than 80 listed Japanese companies who have more non-Japanese than Japanese employees, but are they truly global companies?

The companies with the largest proportions of non-Japanese employees are mostly electronics manufacturers with factories in Asia and China – Foster Electric (98.9% of its employees are non-Japanese), UMC Electronics (98.5%), Mabuchi Motor (96.4%) and Minebea Mitsumi (91.6%) for example.

Two of these have no non-Japanese in management positions, according to Toyo Keizai. (who define “management” as having management positions in the Japan headquarters). Minebea Mitsumi (with 9 non-Japanese managers representing 0.5% of management) has at least set a goal of having 10% of its management to be “diverse” and Toyo Keizai says there are more cases of, say, a Thai employee being seconded to Indonesia and then moving to Japan headquarters as part of a management development path – something that is more common in Western multinationals.

The Japanese company with the largest number of non-Japanese employees in absolute terms is Sumitomo Electric Industries – a big employer in the Europe, Middle East & Africa region too – with several automotive wire harness factories in Africa.  Other companies with large numbers of non-Japanese include the NYK group (due to employees manning ships and other logistics operatives) and NTT (who have acquired large multinational IT services companies like Dimension Data).

In terms of largest proportions or absolute numbers of non-Japanese in management in their headquarters, Nissan with 163 non-Japanese managers (5.9%) and Nomura with 181 non-Japanese managers (4.1% of management) are the standout companies in Toyo Keizai’s Top 100. The only other companies in the ranking with non Japanese management in double figures are Panasonic (27), Honda (15), Denso (15), Dentsu (14), Fujifilm (14), Fujitsu (14), and Daikin (10).

It is very tough being one of a handful of non-Japanese managers in Japan HQ, and I would agree with Toyo Keizai’s implication, that to offer truly global careers in a global company, both to Japanese and non-Japanese employees, the number of non-Japanese in management positions in the headquarters need to increase substantially in order to reach the kind of critical mass that makes a difference.

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German workstyle versus Japanese customer convenience

You can’t have German workstyles and Japanese customer convenience, says Shion Amemiya, a 26 year old Japanese woman who has been living and working in Germany for 4 years and has now written a book about it.  The book hits a nerve in Japan because of the pressure companies are under to reform their workplace cultures and cut back on overtime.  Germany is often pointed to as an example of a thriving economy where people don’t do overtime and take plenty of holidays.

Germany has one of the highest overtime rates in the EU, she says in an article in the Toyo Keizai. Actually, looking at Eurostat’s 2018 figures, the UK has the highest number of hours worked per week per full time worker and Germany is somewhere in the middle.

She points out that Germans will do overtime, if there is work that needs to be finished, although there are more Germans who will stick to their rights and leave on time regardless then there are in Japan.  But as she notes, those kinds of people will not be well evaluated by bosses or colleagues.

Overtime is worked in order to finish a job, and there is a lot less “face time” overtime in Germany than in Japan.  Also, if overtime is worked on one day, Germans will then work fewer hours to compensate for this the next day, she observes.

As for holidays – she says what is great for the holiday taker is not so wonderful for the end user. She notes how in the summer, offices are empty, but that also meant that the local government officials, dentists and doctors she wanted appointments with were also away on holiday, and her favourite cafe was shut. Often, the person away is the person in charge, and nobody else can take care of their work while they are gone, and you are told to wait a month.

In Japan customers will insist on the person in charge being contacted even if they are on holiday, but in Germany she notes, customers and suppliers are seen as equals, with mutual rights – “I take a holiday, so I must accommodate other people taking holidays.”

Because people don’t take much holiday in Japan, it is a convenient country – shops are always open, the person in charge is always available.  Just copying another country without realising the drawbacks is pointless.  Japan needs to come up with workstyle changes that are appropriate to Japan, she concludes.

 

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Fujitsu focusing on education of employees to improve overseas profitability

Fujitsu, one of the largest Japanese employers in Europe, has drastically reduced its hardware product range over the years, withdrawing from personal computing, mobile phones and semiconductors. Its CFO, Hidehiro Tsukano has said “we are no longer a manufacturer”, according to the Nikkei. The turning point was the appointment of Tatsuya Tanaka as President in 2015, himself from the industrial solutions sales side of the business rather than an engineer, with experience in Asia.

Tsukano believes profit should come from the value added by human beings rather than things. Because of Japan’s labour shortage, Fujitsu has been focusing on IT investment in retailing and service sectors, working closely with Microsoft.

However the consolidated operating profit margin to March 2018 was 3.6%, still far from the stated goal of 10%.  Profitability per head (Y1.23m) is higher than NEC (Y0.58m), but still significantly below the misnomered Nomura Research Institute (Y5.35m) and Itochu Techno-solutions (Y4m). Tanaka said at the recent annual results meeting that his aim to hit 10% operating profit margin within his term of office may have to be revised.

One major cause of this inability to reach higher profitability is Fujitsu’s overseas business, which is around 40% of turnover. The hardware sales model, based on sales of servers and PCs still remains and Fujitsu is in a price war with Lenovo and HP. It has not yet switched to the business model in Japan of adding value through IT services and the most recent quarter still showed a Y6.8bn loss.

Human resource development might be the key to improving overseas profitability. Tsukano has said he wants to use some of the cash freed up from a change in the pension scheme to invest in employee education.

A management policy briefing will take place in October, and although analysts are saying there is steady progress in reforms, they need to see some concrete measures for improving the profitability of the overseas business.

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Trends in Japanese company expatriation to Europe – or why are there so many Japanese women in Malta?

Despite a small decrease over the past three years, the UK continues to be the favourite destination in Europe for intra-company transferees – 8,684 as of October 2017 according to Japan’s Ministry of Foreign Affairs, compared to 8,518 in Germany.  Japanese company sponsored expats in Germany and the UK make up about 58% of all Japanese corporate expats (around 30,000) in the EU/EEA.

If you add in their dependents, it comes to over 50,000 Japanese living in Europe, at the behest of their employer. This compares to over 250,000 in Asia and just under 120,000 in North America, out of 463,000 Japanese intra company transferees and their families in globally.

Of course the number of company transferees in a country is not purely a function of the market size.  We crunched the numbers against population size and this interesting map showed up.  The tiny dark spot is Luxembourg, where the population is only just over half a million and there are 175 Japanese intra company transferees resident. The UK has the next highest density, then Belgium, the Netherlands, Germany, Switzerland, France. The highest density in Eastern Europe is in the Czech Republic.

 

The Ministry of Foreign Affairs sticks to the old fashioned breakdown of male/female employees and Luxembourg is also an outlier there, with 41% of transferred employees being female, only surpassed by Ireland (46% 95/205 transferees), Malta (90% 19/21) and Cyprus (50% 2/4 transferees).  There are very low numbers of Japanese female employees  in Eastern European countries, and also Belgium. Maybe this has something to do with Toyota’s regional headquarters being in Brussels.

The average overall of female employees transferred to Europe is 25% of the total, and there has not been much movement in this over the past three years. The reason there are far more females proportionately in some countries than others has the same root cause as why there are more dense groups of Japanese in some countries than others – it depends on the industrial sector and the nature of the operation – whether it is manufacturing or services, or a regional headquarters.

The UK has a high density of Japanese company expatriates partly because of the three large Japanese automotive production sites there, but also because of the high density of financial services and holding companies in London and the South East. Japanese banks, trading companies and insurance companies send a lot of Japanese expats to their regional HQs, which are usually in the UK, including trainees on short term secondment, many of whom are female. Technology companies such as Sony, Ricoh and Canon also have large regional HQs in the UK and a high number of expats. Similarly Ireland has a lot of financial services companies, particularly aircraft leasing.  Luxembourg does have a couple of large manufacturers headquartered there – FANUC and TMD Friction – however, as you might expect, most of the other companies are financial services related.

There also tend to be large numbers of expats every time production sites are set up – engineers on short term projects, involved in technology transfer. Double digit increases have occurred over the past three years in Japanese expats being sent to Poland, Sweden, Hungary and Slovakia following investments there.

But the biggest increases numerically have been 602 more expats in Germany (up 8% over three years), 359 more in the Netherlands (up 23% over 3 years) and 252 more in France (up 7%) compared to drop of 62 (1%) in the UK.

The Netherlands has been the choice of quite a few Japanese financial services companies, along with Luxembourg and Germany, for strengthening EU presence post Brexit, as well as a stronghold for logistics companies. Its tax regime has also been attractive for holding companies – more brass plate up till now, but it would seem, now with actual physical presence too.

So why are there proportionately so many Japanese women employees transferred to Malta? Maybe they’re working at Konica Minolta‘s service operation there for 35 countries in the region*. A lot of smaller countries, with English and other language speaking graduate populations – such as Portugal – are becoming popular bases for outsourced support.

This suggests to us that the UK may be slowly losing its grip on being the preferred base for regional, functional and services headquarters for Japanese companies, and therefore the preferred destination for Japanese expatriates.  There is a long way to fall however.

* Andre Spitieri (non resident Ambassador to Japan from Malta) contacted me after I posted this blog to say that there are a lot of Japanese women working in Malta in the tourism industry. According to the Ministry of Foreign Affairs, there is only one Japanese company in Malta, and JETRO says it’s Konica Minolta. It may well be that there are branches of the big Japanese travel agencies in Malta, to which Japanese female employees have been posted, who are counted among the 19 female intra company transferees there.

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Who’s looking grumpy in Japan’s summer bonus season?

If you’ve noticed your Japanese colleagues looking grumpier than usual and making pointed remarks about the amount of money overseas offices soak up, you may need to be aware that it’s not just the heat and the typhoons getting to them, but the fact that despite Prime Minister Abe’s push, some companies are still cutting salaries –  and employee numbers are shrinking.  The summer bonus season, which will have been added to their monthly pay cheque in June or July, may have reminded them that their salaries have not increased much in real terms over all for some years, but they are supposed to be grateful they have a secure job, with bonuses, benefits and a pension.

It’s surprising to see who tops the list in Toyo Keizai’s ranking of companies who have had the biggest reductions in pay and number of employees over the past five years – trading company Mitsui Bussan is at #1. Toyo Keizai reckons this is because their business was badly hit by falling resource prices over the past few years.  Although average annual income at Mitsui is high – around Y12.3m (US$111,000), it has dropped by Y1.48m compared to five years’ ago.  The number of employees has also fallen by 201 to 5,971.  Sumitomo Corporation, another major trading company is at #9 – average income falling Y1.255m but personnel numbers only falling by 23.  Mitsubishi Corporation is at #78 – total average income has fallen by around Y260,000, and numbers of staff have dropped by 579 to 5,217.

As you might expect, given its recent problems and selling off of businesses, Toshiba is in the top rankings, at #15, having reduced the number of employees by 4,401, to 32,353, with average income falling by Y880,000. Similarly Sharp has also reduced total average income by around Y600,000 and cut staff at almost double the rate of Toshiba, by 8,175, to 13,363.  Sony has reduced staff even more, by 10,391 to 6,185, and total average income has fallen by Y410,000.

Eisai, the pharmaceuticals company, is at #23, having cut its staff by 938, to 3,246 and average income falling Y710,000.  There has been no obvious negative issues for Eisai over the past five years, so maybe this is the work of the CFO, Ryohei Yanagi, trying to keep ROE above 8%, as we previously blogged.

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“May sickness” in the Japanese graduate recruitment season

Mid May is usually the deadline for applying for graduate entry at Japanese companies, in the job hunting process (known as shukatsu – a good explanation from Japanese recruitment agency Disc here) for final year students in Japan. This usually prompts some interesting analyses from the Japanese business media on what’s new and changing on the graduate recruitment scene.

An article in Nikkei Business focuses on the banking sector, a traditional favourite for arts graduates of top universities.  All the megabanks are reducing their graduate intake – MUFG by 10%, SMBC by 20% and Mizuho by a whopping 50%.

Mizuho had already announced that it was looking to reduce headcount by a quarter but this cut in graduate hires is not simply about hitting that target. Mizuho’s recent recruitment brochure is headlined “We want to meet people who are not very Mizuho”.  They are drastically reducing the number of “specialist” track graduate hires – mainly counter staff – more commonly known in other companies as the ippanshoku track that attracted mainly female graduates – the old “Office Lady” track.

For the generalist track, Mizuho have started targetting science graduates at universities, with a view to developing Big Data analysts, and also Japanese graduates of foreign universities, or foreign students at Japanese universities.  They say they are looking for creative people, who have a spirit of challenge.  As the Nikkei says, it’s not clear how easy this will be for banks which are usually the choice for people looking for long term security and stability.

Japanese companies are no longer “family” but a tree to perch on

Graduate attitudes to employment may be going Mizuho’s way, however. Another article in the Nikkei Business looks at “May sickness” – the feelings of depression that hit graduates who joined the company in April.  With the labour shortage being felt in Japan, companies are worrying about the persistently high (by Japanese standards) proportion of graduate recruits who leave within the first 3 years – stuck at around 33% for the past few years, compared to around 20% in the late 1980s and early 1990s.

The usual explanation for persistently high numbers quitting is that when companies cut their graduate intake in tough times, graduates take whatever job they can find, and may end up at a company that does not suit them. But this does not explain why now, when graduates can take their pick of many offers they still end up unhappy with their choice.

The annual survey of Japanese graduates by the Japan Productivity Centre provides a clue.  Since 1971, graduates are asked which of three reasons most closely reflects why they chose their employer.  In 1971, the biggest reason (chosen by 25%) was “because the company had a durable future”.  This is now the least popular reason, chosen by less than 10%.  “Because the work is interesting” was the least popular reason in 1971, chosen by around 15%.  This dipped below 10% in the 1980s, then rose, and is now declining, to just below 20%.  The most popular reason is now “because I can develop my own abilities and individuality”  – chosen by over 30%, compared to less than 20% in 1971.

Tama University’s Yasuyuki Hatsumi concludes this shows that young Japanese people no longer see companies as a family to join for life, rather as a tree to perch on temporarily.  He suggests that Japanese companies might need to plan for this, and allow employees to take a year’s sabbatical, to rethink their career paths and take up further professional development.

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Nidec – work style reforms are “a bigger revolution than when in the Meiji era everyone changed from wearing kimonos to western clothes”

Shigenobu Nagamori founded electric motor company Nippon Densan in 1973 but it wasn’t until the late 2000s that he started on his overseas M&A buying spree, acquiring the automotive actuators and motors division of French company Valeo.

He began to realise that he would have to change the way Nidec worked in order to succeed overseas.  According to a special feature in the Nikkei Business magazine, he was puzzled as to why Western employees worked shorter hours than in Japan and took more holidays, yet their companies’ performance was better than Japanese companies.

Many Japanese companies are looking to change their working patterns, under pressure from the Japanese government for ‘work style reform’ but “merely reducing hours worked will end in failure”.  Nagamori was looking for a change of mindset.

Unnecessary meetings

One area Nidec tackled was unnecessary meetings. In just 4 months at one of their subsidiaries, Tosok, the number of types of meetings was reduced from 156 to 89, and their total occurrence was reduced from 716 to 440 a year.  The number of hours spent on meetings fell from 533 hours to 240 hours a year.

Meetings that did not have a result were particularly targeted, such as the “related divisions information exchange meetings”.  New rules were introduced such as:

  1. Meetings should only take 45 minutes, or 25 minutes for short meetings
  2. Participants should all be told the purpose of the meeting, the schedule and the expected results beforehand
  3. Only the absolutely necessary people should attend
  4. #2 should be reviewed at the beginning of the meeting
  5. 1 page per topic, distributed before the meeting
  6. At the end of the meeting, conclusions and homework should be agreed, and who is in charge of each action point
  7. The minutes of the meeting should be written during the meeting and circulated within 24 hours after the meeting

Missed deadlines

Another issue that was raised in the search for changing mindsets and work patterns was the continual missed deadlines for prototypes.  Because the automotive industry has become so competitive, car manufacturers were shortening their development cycles. Trying to meet their short deadlines for prototypes was causing much of the overtime at Nidec. There was too much of a gap between the time when Nidec’s engineers discussed with the car manufacturers’ engineers and the order was officially made through the sales people.

So it was decided to make the order official once emails between then engineers reached a point of certainty.  This shortened the gap to starting new development work by 3-9 weeks, with a significant reduction in missed deadlines.

The basis for these changes in Nidec’s way of working came from Nagamori’s appointed successor, Yoshimoto, who had become a Master Six Sigma Black Belt when he worked at GE.

Ensuring women are promoted

Initially Nidec hoped to set a target of women comprising 15-20% of managers by 2020, up from the current 2.8% but this has been revised down to 8%. “There is no point in forcing women to be managers if they don’t want to do it” Nagamori states.  Reforms have been introduced such as being able to work from home, being able to shift working hours 1 hour either side of the set start and finish times and also being able to take holiday in 1 hour units.  These apply to male or female workers, but are intended to make caring for a family easier.

Nidec has also invested in changing work patterns on the factory floor, with robotization and Internet of Things, as well as investing in management development, to empower managers to take decisions and also improve their English ability.

English language and management capability

The feature finishes with an interview with Nagamori, where he asserts that to reduce working hours, you have to improve productivity first.  For example, in Japan it is common to make courtesy calls on customers without any real reason. It’s not a total waste of time, but it is not directly productive.”

“Japanese productivity is about half that of Germany.  So we need to double our productivity in order to get to zero overtime.  If you just cut overtime to zero, you have to either hire more people or cut salaries.  Both would be a mistake.”

If overtime disappears, then juniors will no longer get overtime pay.  Nagamori remembers a time when he too mainly used his overtime pay to live off, saving all his bonus and salary.  “30, 40 years on, Japanese society has not changed” he points out.  He says an employee wrote him a note to say that he had a loan on the basis of him doing 50 hours overtime a month.  So if he didn’t get overtime pay on that basis, he would not be able to repay the loan.

So he currently tries to give the overtime pay reduction back half as bonus, and the other half as training subsidy.  This is not the same for everyone – those with high productivity get higher bonuses.   “It’s a big problem that currently those with low productivity stay late and get overtime pay and those with high productivity leave and have lower pay”

“About half of overtime is work that doesn’t really need to be done, so that’s easily got rid of, but the other half is necessary work, and reducing that is not so easy.”

“ The biggest revolution is to get people to recognize that overtime should be zero.  ‘Look at the West, nobody is doing it’ you have to tell everyone”

“It’s not easy for Japanese companies to switch to Western ways of doing things. It’s a bigger revolution than when in the Meiji era everyone changed from wearing kimonos to western clothes”

Nagamori says the reason for the lack of productivity in Japan is firstly English language ability.  “Phone calls take twice as long and you need to pay for translators for negotiations.”

“Also, managers lack management capability.  They don’t question why their team are doing so much overtime.  They don’t understand what their team are doing.  If they said – ‘do this work and then go home’ then there wouldn’t be so much overtime.”

“In the West there are plenty of positions for specialists, but in Japan there are people who don’t have management ability in line positions.”

 

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Japan’s megabanks lose popularity with Japanese graduate hires

It’s not surprising that Mizuho, one of Japan’s megabanks, has fallen in popularity from the top spot for 2018 new recruits to #17 for those graduates aiming to join in 2019, according to recruitment agency Disco.  As previously blogged, Mizuho’s former president, now chairman, Yasuhiro Sato has been very clear that the bank should lose around 30% of its workforce globally, through greater use of information technology, and yes, AI.  His successor Tatsufumi Sakai shows no signs of reversing this.

The other megabanks have fallen less dramatically out of favour, from #2 to #4 in the case of MUFG (dropping the Tokyo from Bank of Tokyo-Mitsubishi UFJ as of April 1) and from #5 to #14 in the case of Sumitomo Mitsui Banking Corporation.

Japan’s airlines JAL and ANA have stayed in the top 5, at #1 and #3 respectively. Perennial favourites, the trading companies Itochu and Mitsubishi Corp have also gained popularity, up from #7 to #2 and #9 to #6 respectively.

Manufacturers such as Toyota (#5 from #12), Sony (#11 from #31) and Denso (#19 from #33) have become more attractive, as graduates realise that the Internet of Things means traditional companies are now moving into more innovative IT related areas.

Japanese graduates who have studied at foreign universities favour foreign companies operating in Japan such as Procter & Gamble, Google and Amazon, or management consultancies, whereas no foreign owned company is in the top 10 for domestically educated Japanese graduates.

 

 

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