Human resources

Employers need to change to encourage Japan’s milliennials to be mobile

European employers, just as in Japan, are worrying about how to manage and motivate the so-called millennial generation – people who were born between the early 1980s and the early 2000s.

Across the world, one characteristic that unites the millennial generation is, of course, a high use of social media. There is some evidence that this has led to a more open minded attitude to the rest of the world. In the UK, the millennial generation is much more pro-European Union and pro-migrant than the older generations. Millennials are used to building relationships with people they have never met, through mutual interests and hobbies, regardless of their location or nationality or gender.

This has translated into a higher desire than other generations to live, work or study outside their home country. 71% of millennials, regardless of gender, want to work outside their home country during their career, according to a global survey by PwC in 2015. A multigenerational global survey by PwC in the same year showed that all age groups and genders overwhelmingly agreed that secondment early in a career was also critical.

Yet I have seen surveys of Japanese millennials which show that fewer of them are studying abroad or want to be seconded overseas than previous generations. I expect their concern, which is also the top concern of other nationalities, is what their role will be when they are repatriated to their home country.

I suspect there are also assumptions being made on the employer side about who an expatriate should be and what the role should involve. I recently met a British academic who had interviewed various Japanese women living in the UK and she found that many of them joined a Japanese company in Japan, in the expectation that they would be posted overseas. Yet their requests to be seconded were ignored, so they quit their companies and moved abroad themselves.

It seems to me that many of the issues Japanese companies are facing such as attracting and retaining younger people, an ageing workforce or a lack of men or women who can take up global management roles could be resolved by having a more integrated and inclusive approach to job mobility. It is quite normal for European companies to hire graduates from across Europe, and then rotate them around their operations in different countries. A few of our larger clients are now rotating their graduates to Japan too. Global roles do not have to be for 3-5 years in another country – they can be permanent, a few months or indeed a virtual global role.

One of the messages from the campaign for Britain to stay in the European Union – aimed at the millennial generation – is that if the UK leaves the EU, it will be less easy for young British people to study or work in other European countries. Unfortunately, one other characteristic of the millennial generation is that they are less likely to vote than the more pro-Brexit older generations.

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

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Why the British and the Japanese are less productive than the Dutch

When I was visiting the Netherlands last week, one of the Japanese managers I met said his main concern was how to motivate his staff. I hear this question often from Japanese managers working in Europe, and I always want to ask – what do you mean by motivation – what would it look like?

Usually a motivated employee is thought to be an employee who makes an effort and perseveres. This is hard to measure objectively, and it is a worry amongst Europeans that Japanese managers evaluate employee motivation by how many hours employees are at their desk. This is a justified concern, reinforced recently by a report I heard regarding a Japanese GM in Spain who was worrying why his Spanish staff were away from their desks far more than Japanese or even British staff.

If you ask Dutch people what motivates them, according to a long-standing Japanese resident in the Netherlands, they will say “boss, just don’t waste my time.” In other words the main way to demotivate the Dutch is to waste their time.

The Dutch have high productivity (usually defined as GDP per hour worked), and also the happiest children, according to various OECD and UNICEF surveys. The connection between the two is pretty obvious when you look out of the window in Amsterdam – the streets are full of mothers and fathers on their bikes, with their children in little carts or on a tandem, going to and from school. Dutch families like to eat supper, together, at 6pm. They also like to spend the evenings doing sports or other hobbies – and allow their children plenty of freedom to come and go as they please. The streets and housing seem clean, safe and spacious, with offices, schools and housing all mixed together, so commuting time is relatively short.

The Dutch people I met said it was quite normal to work one or two days at home, particularly those who had jobs which required regional or global coordinating activities, so didn’t need to be in the office to see their team. It is also quite normal for men and women to work part time if they have children, but retain their management roles. So in other words the best way to motivate Dutch employees is to ensure they feel productive – that they can get a lot done in a short amount of time.

However, I overheard a pair of British managers in the hotel at breakfast talking about their Dutch colleagues. They agreed – “the trouble is, although the Dutch are efficient at getting things done, they just wander off on their own and do it, and you end up with everyone going their own way, it’s really hard to coordinate.”

Maybe this is why Japanese and British productivity, particularly in the services sector, is lower than the Dutch. We spend a lot of time coordinating and monitoring other people’s work rather than producing added value ourselves – perhaps too much time?

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

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Balkanizing Europe – in a good way

On the way to the stunning Krka waterfalls in Croatia, from where we staying on the Adriatic coast for our holidays last summer, our tour guide suddenly said “we are now in the Balkan part of Croatia”. The term Balkan has many resonances for Europeans who know their history. Not only is it 20 years since the war in the Balkan peninsular, but it is 100 years since WWI, which was thought to partly have been the result of “Balkanization”, whereby the countries, formerly ruled by the Ottoman Empire or the Austro-Hungarian empire, fragmented into warring states. Clearly our guide wanted us to appreciate that Croatia was not just Balkan, but also Mediterranean, and therefore part of modern Europe.

The warring Balkan states were in part reunified under the Soviet Union after WWII and most Western Europeans of my generation remember the Adriatic coast as being part of Yugoslavia, and a cheap but pleasant place to go on holiday. Yugoslavia was meant to be one of the more benign and successful Soviet satellite countries, so it was a shock to Western Europeans when it collapsed into a bloody civil war.

Croatia became the most recent member to join the European Union, in 2013. Other Balkan countries such as Former Yugoslav Republic of Macedonia, Serbia and Montenegro are official candidate countries, with Bosnia and Herzegovina being considered a “potential candidate”.

With the European Union in danger of falling apart itself, thanks to the Eurozone crisis and the UK referendum on exiting, the Balkan candidate countries must wonder what exactly the benefit of joining the EU might be. For them, the original aim of the European Union, to prevent outbreaks of further wars through economic cooperation, still has meaning, of course, given their recent history.

The benefits of economic cooperation are less obvious. It is clear from Croatia’s recent accession that joining the EU later on means missing out on the big regional business investments by multinationals. Balkan state populations and economies are relatively small, so there is not much incentive to invest substantially in opening a subsidiary in such countries – the markets could probably be easily covered through a local agent, or from a regional base in Germany or Poland.

Croatia still has a shipbuilding industry, representing 10% of its exports but clearly it has had to concede that a major economic driver is going to be tourism, as it was in the past. I saw plenty of Japanese tour groups there, and I expect, like us, they were impressed by the beauty and history of Croatia’s old towns, the delicious seafood and how clean and well looked after the streets and buildings were.

Above all what really struck me was the hardworking, efficient, polite, honest, well educated, excellent English ability and cheerful nature of all the Croatians we met. Although the Croatian market may not be attractive to foreign investment, the Croatian workforce certainly is.

I only hope that Europe can work towards a future where Balkanization has a new meaning – that people from the Balkans contribute to and benefit from the European single market – and not the old definition of a disintegration into hostile, ethnically cleansed states, yet again leading to the kind of war that the European Union was meant to prevent from ever happening again.

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

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Bending over backwards to be inclusive

I was discussing with a client recently the way accepted terminology keeps changing in the UK business world. Apparently “flexible working” is now being renamed “agile working”. “Agile” working is meant to have a wider definition than flexible working – the idea being that the focus should be on performance and outcomes, allowing maximum flexibility on the who, what, when and where of executing the work. “Flexible” usually (as it does in Japan) means flexibility on the hours worked and tends to be used when workplaces are trying to be family friendly towards women. “Agile” working implies it is a way of working for every employee.

The client’s own job title was another indicator of change – “head of diversity and inclusion”. Diversity has become a more commonly used word in Japan now, mainly to mean gender diversity, but increasingly companies are looking at other kinds of diversity such as nationality or sexuality. The reason that “inclusion” has been added to “diversity” in the UK is to ensure that companies don’t just focus on targets for diversity, but also how the corporate culture should change to ensure that people with different backgrounds to the mainstream do not feel excluded from decision making or promotion or the everyday conversations and meetings that are going on around them.

Sometimes I find myself thinking that all this emphasis on terminology is irritating and a distraction, but then I remember what it felt like to be a foreign employee in a Japanese company headquarters. I have no complaints about the way I was personally treated, but I regularly used to point out, when asked for my input into English language documents like the annual report – that it seemed alienating to people outside of Japan if employees were broken down into male/female, or Japan-employed and overseas-employed.

I knew why these categories existed – because at the time, 99.9% of females were in administrative track jobs, and 100% of men were in management track jobs – so this was a simple way of indicating the ratio of administrative versus line management/sales people in the workforce. The Japan-employed and overseas employment figures aligned with the Japan parent company-only and consolidated accounting methods.

But it nonetheless made me feel like being female or “overseas” was a lower status. This has all changed now of course, as the distinction between administrative and management track lifetime employees in Japan has disappeared in many companies. With holding companies now being allowed in Japan, and changes in accounting methods, the parent vs consolidated accounting distinction for employees is also less meaningful than it used to be.

I still have Japanese clients consulting me about what to call their various categories of employees however. Some choose “rotating staff” to describe Japanese expatriates – but again this implies that anyone hired outside Japan has no chance of being posted elsewhere. One British employee complained to me about an email from Japan HQ which used the term “subordinate”. Even in British class ridden society, we prefer to call all employees “colleagues” or “team members”.

(This article first appeared in Japanese in the Teikoku Databank News in February 2016 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.)

How regular is your Japanese company?

Toyo Keizai has ranked the top 500 companies in Japan with the most non-regular staff (see our previous post for what this means and why you should care if you work for a Japanese company). Consciously or unconsciously, however, the “total employee” number they use includes overseas employees and the non-regular staff number is for Japan hired staff only, as far as I can work out. Maybe it’s an indicator that overseas staff are seen as “regular” after all. It certainly would account for the large increase in regular staff at NTT Data over the past 5 years for example – as they have been on a major acquisitions spending spree overseas – and will grow further once they integrate Dell Services.

We took a look at how this applies to the Top 30 Japanese employers in Europe. Numbers are missing for some major employers like Canon, Sony, and Bridgestone. Checking on the sources, which are mostly the Japanese stock exchange submissions, it seems these companies do not break down employee numbers by contract type.

My old employer Mitsubishi Corp does not disclose regional break down of consolidated employee numbers), but I note that the number of non-regular employees has fallen 8% the past five years (presumably due to the re-introduction of the “regular employee” administration track), although they still represent 20% of the total consolidated employees (18,054 out of 72,000). Conversely, regular employee numbers have risen by 23%. As there are only around 6000-7000 employees in the Japanese offices of Mitsubishi Corporation, and around 10% of them are classified as non-regular, this must mean the other 17,000+ are non-regular staff in consolidated companies (not the main MC offices) in Japan. That still leaves 46,000 or so “regular” employees of consolidated companies outside Japan.

Employment status in Japan, is, as they say “complicated”. But you can bet Japanese employees have a very clear idea who is in-group and who is out.

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“Like a marriage gone stale” – why is Japanese employee engagement so low?

Japanese salarymen are envied around the world – as Junko Okamoto, former Yomiuri journalist and Dentsu consultant and now CEO of Glocomm says – for not being fired no matter what they do or how little they do. So you would think this means they have a high degree of engagement towards their employers. But actually, no matter what survey you look at, Japanese tend to come lowest in terms of engagement and trust.

For example – in Gallup’s 2011-2012 global survey of 142 countries and 20,000 people:

Japan – 7% engaged, 69% not engaged, 24% actively disengaged
UK 17% engaged, 57% not engaged, 26% actively disengaged
France 9% engaged, 65% not engaged, 25% actively disengaged
Germany 15% engaged, 61% not engaged, 24% actively disengaged
USA 30% engaged, 52% not engaged, 18% actively disengaged

Japan’s percentages are not far off China, so maybe it’s an “Asian” thing, you might think. But another survey by Aon Hewitt looking just at Asia Pacific levels of engagement found that Japan – at 33% actively disengaged – had the lowest engagement score.

As Okamoto points out, there is no direct translation of “engagement” in Japanese and also, the Japanese may have a tendency to be understated and modest in such surveys. However, if the wording is framed differently, there is still seems to be a problem. Edelman issues a world trust survey every year of 28 countries, including the question of whether people trust their own company. Japan comes bottom on 40%, compared to 64% for the US, 57% for the UK, 29% for China, 83% for India – even lower than Russia on 48%.

There are many reasons you could list up for Japanese salarymen’s disengagement – and Okamoto does so:

Long working hours
Low or even decreasing take home pay
Rigid corporate culture – based on precedent, demerit/points off systems, emphasis on sheer doggedness
Seniority based promotion
Inappropriate assignment of people
Sexual harassment, power harassment, maternity harassment
Rigid compensation and HR systems (egalitarian to the point of unfairness or too strictly perfomance based)

Okamoto adds “friends foreign and Japanese who work for foreign companies often point out that Japanese companies force you to travel economy class even if you’re very senior, which would be unthinkable in their companies, or that foreign companies will incentivise their best people to stay, with money or motivational schemes.”

Employees of Japanese companies don’t understand what is being rewarded. They point to those who are slacking off and yet are paid the same. But even the slackers are unhappy, because they feel like the company is not making the best use of them. Japanese people seem to think that work should be a penance and that you become happy by working hard. Okamoto cites various Western researchers who say that you should first find out what makes you happy, and then you will succeed.

Okamoto’s conclusion, as is mine, is that Japanese companies are bad at communicating – to their staff as well as to the outside world. “Being hired by a Japanese company is like getting married. The company is your family or your home. And although the divorce rate has risen in Japan recently, it’s still lower than the USA. In Japan the view is that even if you hate the other person or don’t love them any more, there is a shared fate. However in the USA you either get a divorce or if you don’t want to get a divorce you put more effort in with gifts and words of love… Japanese companies and their employees are like a married couple who have forgotten each other’s good points and become stale.”

IBM Japan’s secret restructuring manual

Thanks to global market pressures, the days of being a “hatarakanai ojisan” (middle aged guy who doesn’t actually do any work) in a Japanese company are over, according to Toyo Keizai magazine. It used to be that even if there was not any work for a lifetime employee in their 50s to do, they would be allowed to continue coming into work until such time as circumstances changed or they retired of their own accord.

Now most Japanese companies use “requested retirement” sessions to persuade employees to leave the company of their own volition if there is no longer a role for them. However, it is forbidden to use words like “fired” in such interviews. It is possible, but only under very rare circumstances, to actually fire a lifetime employee in Japan – it mainly has to be proved that there is gross incompetency. So when an IBM Japan employee in his 50s sued last December for work related illness, claiming that repeated “requested retirement” sessions caused him to become depressed, the deciding factor in his claim being accepted was that his boss had said “if you don’t accept our request, you will be fired”.

Toyo Keizai have managed to get hold of IBM Japan’s “Requested Retirement Manual” which apparently was developed for internal management training by a consulting company.

The manual recommends using the carrot and stick technique to start the discussion. The stick is that given the person’s abilities and the current situation of the company, they cannot continue in their current role. The carrot is that discussions about redeployment or reemployment will be done in a kind and understanding way. The manual encourages the manager to put themselves in the others’ shoes.

It has recommendations on how to deal with the four stages of:

Denial – nothing to do with me: explain the personal situation and future in detail
Resistance – why me, why not someone else: listen sympathetically and allow them the right to differ
Exploration – will there be a job elsewhere, can I support my current lifestyle?: guidance – would they like to meet with a counsellor?
Decision – still feeling worried, but will take up the challenge: encouragement – offer personal support and best wishes for success

It also contains advice for dealing with different reactions and personality types – the submissive type, the proud type, the logical type, the desperate, the complainer, the crier, the silent and the angry. It also gives examples of likely questions and how to deal with them, including one I heard about years ago when companies in Japan first started “shoulder tapping” people to leave, which is the “my daughter is getting married – please let me stay until after the ceremony”. The reason for this being that the father wants to be introduced with a high employment status at the wedding rather than as someone who is mysteriously unemployed or in a lower status job. The manual recommends a tough stance on this saying that there can be no exceptions made given the urgency of the situation, global competition etc.

I suppose it is only this kind of question, plus the inability to say clearly that the person will lose their job that makes this different from other countries, and there is nothing unique particularly to IBM as a foreign company/gaishi. There is even a comment at the bottom of the article from someone who experienced very similar methods at a Hokkaido local government agency. In fact IBM Japan is more Japanese than other foreign companies as it still has a company union. 90% of the employees used to belong to it in the 1960s but now only around a 100 or so are members. It was probably one of those members that leaked the manual to Toyo Keizai.

The advice an employment lawyer gives to those who do not want to leave is to say so immediately in an email or letter and repeat this in at least two meetings. Then say that any further meetings are a hindrance to your work. The manual does indeed say that if it is clear that there is no interest in leaving, “then do not approach any further”.

As the article concludes, many Japanese companies are embarking on similar processes in order to restructure, and how far employees are prepared to fight this is both a mental health and a financial choice.

UPDATE: By coincidence it was just announced today that the Tokyo District Court on Monday nullified the firing of five employees by IBM Japan Ltd. and ordered the company to pay their lost salaries. And apparently IBM Japan was found guilty of breaking the Trade Union law last July too.

Japanese employees’ justified fear of being expatriated

Over 1 million Japanese people are living abroad, according to Diamond magazine, and the number of countries business people are being sent to is increasing each year. The era when only those who could speak foreign languages were sent abroad is over. However the number of people who want to work abroad is shrinking. When you ask why people are so negative about expatriation, the most common reason is “worries about my career when I return”.

Diamond gives the example of Mr D, born in Tokyo, who works for an automotive parts manufacturer and had never been abroad – his furthest business trip was to Osaka. He worked in the domestic manufacturing division Only his peers who had been good at languages or studied abroad were sent overseas so he never thought the day would come when he would be asked to transfer. But his company became partly owned by a foreign company and as a consequence some of their executives joined the management team. The President declared that he would like 30% of all employees to have had some kind of overseas experience, and that this was essential for the survival of the company. Mr D is waiting for his orders to go abroad. So far, none of his peers have refused the offer.

According to a global survey by UK recruitment company Hydrogen, the most popular destination for expatriation is the US, then the UK, Australia, Singapore and Canada. However by far the most rapid increase in expatriation is to Asia. Particularly for manufacturers, countries where there are factories are the most likely, so in Mr D’s case, his destination is likely to be Indonesia or Thailand.

But even if it was Europe or the US, would Mr D’s anxiety disappear? To Mr D, it makes no difference – all regions are “foreign”. Why did Mr D join a company where there was a high chance of being expatriated? It turns out it was the only company out of 200 that he applied to that made him a job offer in the post Lehman Shock recruitment Ice Age, so Mr D lied about being willing to go abroad.

Another reason for not wanting to go abroad is that most companies will refuse to set a time limit on how long the expatriation will be. This is due to the fact that they do not know how long it will take before the expatriate becomes effective in their job in the overseas subsidiary. Usually this is around 3-5 years. But sometimes expatriates end up overseas for more than 10 years, and the expatriation has become a “one way ticket”.

Mr D worries that even if his stint abroad is only 3 years, it will still be a “blank” in his career development. Particularly as there is major restructuring going on in the domestic operation and new products will be developed and old product lines disposed of while he is away. Staff who were working on products that were thought to be the heart and soul of the company found themselves being sidelined to “window gazing seats“.

Mr D fears not only that he won’t be able to return to his own division but that by being abroad for 3 years he will miss out on the new technologies being developed in Japan.

Rather than forcing Japan HQ staff to become more “global minded” by sending a large number of them abroad – an expensive and high risk strategy I would argue – why not bring more overseas employees and managers to Japan for short term secondments so they can absorb enough HQ knowledge that they can transfer to the local factories themselves when they return? If more non-Japanese employees work in Japan then the HQ will get used to being more globally minded. It would then only make sense to send Japanese HQ staff abroad who are clearly marked out for senior global management roles, so that their expatriation is seen as a career development step rather than a blank.

Will there be a return on sending Japanese interns abroad?

Sending Japanese students abroad as interns has become very popular in the past year or so, according to Nikkei Business. The Uniqlo brand owner Fast Retailing sends around 73 students a year to Singapore, London and Melbourne. Sompo Japan Nipponkoa despatched 10 interns to Singapore earlier this year and Softbank has sent 5 interns to work for its Sprint subsidiary in Kansas.

It is seen as one solution to the shortage of graduates who have overseas experience or the interest in working abroad. Most “global minded” graduates head for prestigious and well paid trading company jobs. Returns on the hefty investment in such internships are not guaranteed however. Whether enough interns actually then join the companies who sponsored them, or whether a short internship is any substitute for prolonged periods of study abroad is not yet clear. My view is that Japanese companies should invest similarly in internships for non-Japanese recruits or at least offer short secondments to Japan as part of their graduate induction programmes, if they are really serious about making their Japan HQs more globally minded.

Japanese boards in Europe should reflect their customers, employees and community

I have just completed the first phase of research into how diverse the European subsidiary boards of the biggest Japanese companies in Europe are, both in terms of the nationality mix of Japanese and European directors, and also the number of women on the board.

More boards in Japan had women on them than in Europe, which is surprising if you were expecting boards to reflect the employee mix – particularly the pipeline of managers coming through the ranks of an organisation – as there are without doubt more women employees and proportionally more women managers in Japanese companies in Europe than there are in Japan.

The proportion of directors with European nationalities on the board of Japanese subsidiaries varied wildly from none in the case of Toshiba, Sharp and Fast Retailing (the Uniqlo subsidiary in the UK), through to 100% in the case of Asahi Glass, Bridgestone, Canon and Nidec. So national diversity does not seem to be influenced by which industry the company is in. This also means that what to me is the most compelling case for a diverse board, that it should reflect the customers it is serving, is not the key factor I thought it would be.

20 years’ ago, becoming less reliant on Japanese customers abroad as well as in Japan, was the driving force for many Japanese companies embarking on “kokusaika” (“internationalization”). Canon was a pioneer then in appointing Europeans to senior positions in overseas subsidiaries and does as a consequence appear to have fared better than other companies in the consumer electronics sector, both in Japan and in Europe.

The current favoured path to globalization for Japanese companies is through M&A rather than growing international businesses and executives internally, and the major acquisitions of the past decades account for the diverse boards of Asahi Glass (who acquired Glaverbel) and other companies that still have a high proportion of European directors such as Fujitsu (International Computers Ltd), Nomura (Lehman Brothers) and NSG (Pilkington).

There is some sectoral influence. For example, the financial services industry is under intense scrutiny by European regulators who have the power to approve board appointments. They expect directors to have deep understanding and experience of local markets – something which not many Japanese executives can claim.

Both Fujitsu and Hitachi have substantial public sector oriented businesses in the UK (government services, nuclear power and rail) which means that they not only need to meet the diversity requirements of government purchasing but also gain acceptance of the communities in which they operate. For example, the board of a Japan-owned UK utility recently advertised for a director, with a requirement that applicants be a customer of that utility.

For smaller Japanese companies, or those which are just starting in Europe, it is tempting to stick with a small board with just a couple of non-resident Japanese directors, but as boards come under pressure to have greater transparency and better governance in Europe, appointing local directors from the start should lead to better relations with regulators, customers and employees.

(This article first appeared in Japanese in the Teikoku Databank News in December 2015 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.)

Category: Human resources