Women in Japanese companies

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Category: Women in Japanese companies

How to hire and retain top staff in Japan – send them abroad

The most frequent complaint I hear from British and other multinationals with subsidiaries in Japan is around staffing.  They can’t get the staff they want and they are not sure the employees they have are really the best for the job.  This complaint is particularly focused on sales, as most “gaishi” (foreign multinationals) in Japan are primarily sales focused.

Many suspect that this is a cultural issue and contact me because they want to understand how sales and marketing work in Japan. They are aware that customer relationships are all important, and far more long term and personal rather than transactional.   So expecting an instant result from a sales call to a new prospect is unrealistic. Incentivising aggressive sales behaviour with bonuses does not seem to work either.

I confirm that sales and marketing are different in Japan but I also explain that it is going to be tough for them to hire the “elite” from Japan’s top universities, who might have the necessary status and connections to approach blue chip Japanese prospects.  This elite usually want to join Japanese blue chip companies, and view gaishi as high risk, low status employers.

Good staff can be found amongst those alienated by traditional Japanese companies

Good staff can be found amongst the groups that feel rejected or alienated by the Japanese blue chip companies – the salaryman who has worked in a Japanese company for 25 years and now finds himself being given a madogiwazoku (window gazing) job or young female graduates who understandably feel that a foreign owned company is more likely to reward them and promote them on merit rather than on how much overtime or drinking with the boss and customers they do.

Another promising group are those Japanese who have been educated outside of Japan. A recent survey by DISCO – a Japanese recruitment company –  of most popular choices for Japanese graduate recruits shows the clear contrast in mindset between the top 10 for graduates of Japanese domestic universities and those who graduated from an overseas university.

Japanese graduates of foreign universities prefer to work for foreign companies

The top 7 choices for Japanese graduates of foreign universities are Deloitte Tohmatsu, PwC, Amazon, Google, Goldman Sachs and McKinsey. Mitsubishi Corporation and All Nippon Airlines are the only Japanese companies in the top 10, at number 8 and number 9, with KPMG bringing up the rear at number 10.

Mitsubishi Corporation and All Nippon Airlines are also in the top 10 choices for Japanese graduates of domestic Japanese universities – at number three for Mitsubishi Corp after fellow trading company Itochu at #1 and Toyota at #2 and at #6 for All Nippon Airlines. All the other Top 10 choices are Japanese too – Suntory, MUFG (financial services), Shiseido, JTB (travel), Japan Airines and Tokio Marine and Fire Insurance.

My old employee Mitsubishi Corporation made a conscious effort to target Japanese graduates of foreign universities and schools more than 20 years’ ago. In fact I was asked to help interview such graduates – whether to make them feel more at ease or to show that Mitsubishi Corp really was global in mindset, I’m not sure.

Twenty years’ on, many Japanese companies are scrabbling to recruit “global human resources”, but as the DISCO survey points out, Japanese graduates of foreign universities have very different ideas of what they are looking for in a career, compared to domestic graduates.

Japanese graduates of foreign universities want a job which helps realise their dreams and pays well, over stability and long term employment

When asked whether they felt a job should be a way to realise your dreams or a way to make sure you have a secure lifestyle, 40% of graduates of foreign universities chose the former with a further 25% saying they had some preference for the former, whereas for the domestic graduates, nearly 60% said they preferred the secure lifestyle.

As for wanting high pay versus wanting a secure lifestyle regardless of high pay, nearly 80% of foreign graduates strongly or somewhat preferred high pay, compared to under 60% of domestic graduates.  Only 40% or so of foreign graduates wanted to work for one company for a long time, compared to 70% of graduates of Japanese universities.

Foreign companies in Japan need to offer overseas opportunities to Japanese graduates

And as Japanese companies have long suspected, most Japanese graduates of Japanese universities prefer to work in Japan rather than overseas.  Whereas 70% of the graduates of foreign universities want to work outside Japan.

So for foreign companies in Japan, as well as offering higher pay and work which is more engaging, offering a chance to transfer to an operation outside Japan may also be needed to attract and retain foreign university graduates.  That is the card which Mitsubishi Corporation and other trading companies have been playing for decades now and it has paid off for them.

 

 

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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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It’s no longer just about “fixing the women” – in Japan or Europe

According to Nikkei Woman magazine, the clear message from this year’s annual best places to work for women survey is that companies must have an “all inclusive” approach to diversity, not just focus on initiatives for women.

The survey was sent out to 4347 listed Japanese companies with more than 100 employees. The responses were scored on 4 factors – 2 for engagement (how many women were in management and progress on promoting women) and 2 for working practices (degree of work life balance, degree of diversity)

The companies in the rankings are not so different from previous years and other similar rankings  – a mix of non-Japanese companies (Johnson & Johnson at #1, IBM, Accenture), life insurance (Mitsui Sumitomo Life, Daiichi, Nissay, Sompo all in the top 20), health and beauty (Kao, Shiseido), recruitment agencies, retail and travel companies.  Non-life insurance financial services companies also make an appearance – the biggest riser being Sumitomo Mitsui Banking Corporation, up from #26 to #19.

The kind of initiatives Nikkei Business (reporting on the survey in its sister publication) highlights that are more widely inclusive include J&J’s Open&Out, a LGBT network, unconscious bias training for male employees and having agile workplaces – where place and time of work are not restricted.

The four “do’s and don’ts” the Nikkei Business proposes for a wider diversity and inclusion strategy are:

  1.        Don’t think of better utilisation of women as just for women’s benefit, see it as an important management strategy
  2.        Don’t think of shorter hours as just for women who need to look after children, but have everyone working productively and efficiently
  3.        Don’t have management development sessions for women only, add awareness raising sessions for male managers
  4.        Don’t see childcare and elderly care as for women only, include men as carers

All pretty obvious really, and not necessarily practiced wholeheartedly in Europe either, but good to see it spelt out in a mainstream business magazine.  The message that this is about improving the work life of all employees is likely to resonate well with traditional Japanese companies, sometimes termed the “last functioning socialist organisations”.

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Gender pay gap in UK’s largest Japanese employers is lower than average

Any company in the UK that employs over 250 people is supposed to have submitted their gender pay gap estimates by 4th April 2018.  We ran our Top 30 Japanese companies through the Companies’ House database and found that all have submitted data for those subsidiaries which qualify.

The average pay gap of their 50 subsidiaries is around 15%, slightly lower than the national average of 18.4%.  There are some interesting patterns in that there is a gender pay gap in women’s favour in the automotive and tyre businesses – Kwik-Fit and Stapletons (both owned by Itochu) and Micheldever (acquired by Sumitomo Rubber in 2017) and also Toyota Motor Manufacturing and NSG Pilkington Automotive.  Looking at the detail, it seems this is to do with there being a lot of men in the lower paid jobs (presumably tyre fitting, shopfloor, delivery) and some well paid women in the higher paid, presumably managerial/executive jobs.

The gender pay gap is particularly bad in finance, although no worse for Japanese banks than for other UK based investment and retail banks.

The wooden spoon goes to Hitachi subsidiary Horizon Nuclear Power with a 41.9% pay gap, closely followed by Fujifilm, with a 41% pay gap.

Top 30 Japanese employers in the UK (April 2018) & gender pay gap
Rank Company UK employees 2016-7* Gender gap
1 Fujitsu Services 9,326 17.9%
2 Nissan 7,755 -11.3%
3 Honda Motor Europe (sales) 6,539 27.1%
Honda of the UK Manufacturing 4.5%
4 Itochu 6,515
Kwik-Fit -15.2%
Stapleton’s (Tyre Services) -24.9%
5 Hitachi Hitachi Consulting 3,998 30.3%
Horizon Nuclear 41.9%
Hitachi Capital 33.5%
Hitachi Vantara 27.0%
Hitachi Rail -0.9%
6 Mitsubishi Corp Princes Foods 3,532 8.7%
7 Ricoh UK 3,484 17.4%
Ricoh UK Products 10.4%
Ricoh Europe 32.2%
8 Sony Europe 3,143 27.2%
Sony Music 22.7%
Sony DADC 8.7%
Sony Interactive 12.8%
9 Toyota Motor Manufacturing 3,098 -6.4%
Toyota (GB) (sales) 29.7%
9 Marubeni (Agrovista) 2,294 36%
10 Dentsu Aegis London 2,757 14.5%
Dentsu Aegis Manchester 1.8%
11 Canon 2,693 15.8%
12 SoftBank (ARM) 2,173 15.5%
13 Nomura 2,166 36.9%
14 NSG Pilkington Automotive 2,128 -12.1%
Pilkington Technology Management 31.7%
Pilkington UK 8.3%
15 Mitsubishi UFJ Financial Goup 1,987 35.6%
16 Denso Manufacturing 1,897 24.2%
Denso Marston 6.6%
17 NYK Group (Yusen Logistics) 1,855 4.0%
18 Mitsui Sumitomo & Aioi Nissay Dowa (Insure The Box) 1,809 19.0%
19 Calsonic Kansei UK 1,778 3.6%
Calsonic Kansei Sunderland 3.6%
20 Konica Minolta 1,572 18.2%
21 Sumitomo Rubber (Micheldever Tyre Services) 1,543 -19.9%
22 Brother Industries (Domino UK) 1,384 15.1%
23 Olympus Keymed 1,348 27.7%
24 Fujifilm UK 1,257 41.0%
Fujifilm Speciality Ink Systems 8.7%
Fujifilm Diosynth 16.0%
25 Sumitomo Corporation (Howco Group) 1,249 17.5%
26 Unipres 1,237 3.1%
27 JT Group (Gallaher) 1,086 14.0%
28 Sumitomo Mitsui Banking Corporation 1019 34.9%
29 Toyoda Gosei 1,192 0.9%
30 Mitsubishi Heavy Industries (Primetals) 1,152 38.1%
TOTAL 84,966 15.1%

 

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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 graduates choose stability, career development and work/life balance in the services sector

For the past 5 years one of Japan’s mega banks has always occupied the number 1 spot as the employer most popular with Japan’s new graduates.  This is the first time in 9 years that the airline ANA has been the most popular in Toyo Keizai’s annual poll of online users of its graduate recruitment website.

The airline is particularly popular amongst female graduates, for a number of reasons.  Not only are cabinet attendants considered as being part of the graduate recruitment track, but there has also been an increase in the number of women who are put onto the global staff management track.  Its training and development programme is also highly regarded.  Toyo Keizai adds there has been an overall increase in popularity of travel related companies such as JTB (Japan Travel Bureau – at #7) and JAL.

Financial services dominate top 10

Nonetheless, financial services employers continue to be popular – MUFG continues in the #2 spot and although Mizuho has fallen from #1 to #3 and Sumitomo Mitsui Banking Corp has dropped from #9 to #19, Nomura is at #4, Nippon Life at #5, Daiwa Securities  at #6 and Sompo Japan Nipponkoa (insurance) at #8.

Graduate popularity rankings are keenly watched by the companies themselves.  Although lifetime employment is fading slowly, graduate recruitment is still seen as the the “one time chance” of recruiting and being recruited for many employers and employees.  The relative movements show the reputation of the companies and also the trends in Japanese society and the economy.

Electronics and trading companies losing popularity

So it’s not surprising that electronics companies, trading companies and Dentsu (particularly after the suicide of one of its graduates a couple of years’ ago) have all slipped in popularity.  Itochu is the top ranked trading company at #26 (down from #17 the previous year).  Dentsu is at #41, down from #35 whereas its rival Hakuhodo has risen from #32 to #14.  Mitsubishi Corp is at #44 down from #31, Marubeni at #50, up from #53 but Mitsui has dropped to #85 from #42 and Sumitomo Corp from 62 to 87.   As previously blogged, trading companies offer the highest starting salaries, but also the longest working hours.

Amongst the electronics companies, Sony is recovering, at #127 up from #162 but Fujitsu has dropped from #170 to #210, Canon is at #227 down from #126, Mitsubishi Electric down to #154 from #104 and Panasonic is at #156, down from #88. Hitachi is not much changed – at #139, compared to #136 the previous year and NEC only just makes it into the Top 300, at #292, down from#238 the previous year.  Toshiba does not rank at all, unsurprisingly.  In fact Toyo Keizai’s most recent cover story is “Where can all the 160,000 Toshiba employees go?”  Apparently so many are fed up with Toshiba’s slow death, that they are looking elsewhere for employment, but of course the Toshiba name is tarnished.

Automotive and internet sectors improving but still not in the top half

Automotive companies, still seen as Japan’s strongest brands outside of Japan, seem to be less strong in attracting domestic graduates. Apart from Toyota (at #57, up from #78), the other manufacturers do not even make it into the top half of the rankings – Honda is at #171 down from #154 the previous year, Mazda up to #187, from #232 the previous year, Denso, the major automotive parts supplier in the Toyota group, is at #193, up from #237, Nissan down to #273, from #217 the previous year.

Technology “newcomers” seem to be regaining popularity but are not back in top half either –   SoftBank is at #186, up from #234, Rakuten at #205, up from #225, Google at #278 up from #323 and Amazon at #283 up from #394.

So overall, Japan’s graduates seem to be still seeking stability, work life balance and career development, but in the services sector – which seems a pretty fair summary of Japan’s current economic and social situation.

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4 keys to improving Japanese women’s productivity

David Atkinson, a former Goldman Sachs Japan partner who now runs Konishi Decorative Arts & Crafts in Tokyo, regularly features in the Japanese media, most recently in an article in the Toyo Keizai about why Japanese women’s productivity is so low.  He argued that the usual reason given, that women are poorly paid because they are in part time, temporary or short term contract jobs is simply pointing to the effect rather than the cause of low productivity.  Women’s low rates of pay reflects their low productivity.  This is because women are not given high value added work to do and their potential is poorly evaluated.  He argues that Japanese women’s productivity needs to improve because

1) they receive as much welfare as men do, so should contribute equally to the funding of that welfare

2) a declining population means those in work need to be as productive as possible to support the increasingly elderly, non-working population

3) Japan’s resistance to immigration as a means of increasing the working population means that the only alternatives are either to cut welfare or increase productivity.

The journalist who interviewed Atkinson, Renge Jibu, in a follow up article, recommended the 4 following actions for Japanese management:

  1. Make clear the costs of hiring and developing employees, by analysing the status of male and female employees with the same level of education and training 5, 10 or 20 years on.  They might find that women who they thought had left to raise a family are now in similar jobs in other companies or have joined a start up where they saw more opportunities.  This represents a cost to the company in terms of the loss of investment in initially hiring and training them.
  2. Recognise that there is a loss of opportunity in giving easier work to women with the same potential as men.  Giving women employees less productive work is a cost.  It’s like having a new computer and yet never connecting to the internet to do your work.
  3. If you realise that you are not making good use of your female employees, give them more difficult, higher value adding work to do.  Japanese companies are good at reassigning people rather than firing them. One major company reassigned its female administrators to sales roles when they were no longer needed thanks to office automation and was surprised to find that their sales results improved far more than they expected, so gave even more work to those women who showed willing.  They are now one of the most highly rated for gender diversity in management.
  4. The reason women often don’t want to do difficult work is the result of many years of being treated differently to men – and this should be recognised.  It takes a change of attitude on both sides to make a difference.

 

 

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The tragic limitations to Japan’s lifetime employment system

shukatsu-seminarSince the suicide of a young female employee at advertising giant Dentsu in December 2015 was deemed to be due to overwork, there has been a rash of articles in the Japanese media asking whether it’s time to change Japan’s lifetime employee “seishain” (regular or proper staff) system (previously blogged about here).

Nikkei Business described the main characteristics of the seishain system as:

  • No job role boundaries
  • Long work hours
  • Pay increases based on seniority

Which results in:

  1. Strict terms of employment, so when there is an an economic downturn, the employee can be reassigned
  2. Seishain as fixed costs, so it is difficult to transfer over non-regular staff into the system
  3. Seishain not being hired into a role, but into the company, so you do not have transferable skills which will enable you to work elsewhere
  4. Irrational human resource allocation because of features of the system such as retirement from line management at 55
  5. Difficulties in utilising seishain who have household or elderly care duties
  6. A reduction in pension and health insurance benefits because of transferring to a smaller company from a larger company
  7. The risk of losing the element of salary that was based on seniority if you change employers
  8. A lack of workers shifting from dying industries to growth sectors

There is still a big pay gap between seishain and non-seishain, and yet the real average pay of all employees in Japan has fallen since 2005 (with 2002 as the base=100, 2015 = 95).

30% of Japanese men and 10% of Japanese women work more than 49 hours a week, compared to 17% in the USA, 18% in the UK for men/6% for women, 16% of German men/4% German women, 15% of French men and 6% of women and 10% of Swedish men and 4% of Swedish women.

The percentage is even higher for Japanese seishain – 40% of men, 20% of women.

A Nikkei internet survey of 1343 Japanese employees revealed that the biggest reason (70%) for overtime was that there was such a volume of work. Just under 40% said there was a lack of people to do the work.  Other reasons were that there were particular features of their work requiring overtime, that there were too many meetings, that it was expected of them, that it was difficult to go home if others were working and the least popular reason was “in order to increase pay”.

But as one of the participants said in one of my seminars last week – Japanese employees are very expert at stretching their work out so that overtime becomes necessary.  The urge for 100% perfection in the tiniest details is also a root cause I would say.

There are signs of change – some companies have started paying part timers and contract workers exactly the same as seishain and many companies are trying to improve productivity and reduce working hours.

Prime Minister Abe announced in September a Council for the Realization of Work Style Reform – to tackle 9 areas – listed here – in an attempt to address the limitations of the lifetime employment system.  Interesting to see that “the issue of the acceptance of foreign personnel” is #9.

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

shutterstock_290042417European 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.

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Japan’s “No Overtime Day Refugees”
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The lights are on and there’s nobody home

Working 24/7 was seen as the norm during the Japanese ‘economic bubble’ but after the bubble burst in 1990, Japanese employees’ productivity came under the spotlight.  Some companies tried to introduce “waste free” working such as flex time, working from home, early starts and so on while other companies have tried a tougher approach by turning out the lights or fining people or insisting on being notified if overtime is to be done.  Some companies play encouraging music like “There’s Always Tomorrow” (a hit pop song in the 1960s) at the end of the working day.  No Overtime Days have become widespread.

Despite all this, average working hours have hardly fallen at all in Japan in the past 20 years.  2038 hours were worked on average by employees in Japan (excluding part time and short term contract workers) in 1995 and 2026 hours in 2015 according to government statistics.  According to the OECD Japan’s average was 1745 in 2012, compared to 1407 in Germany, 1652 in the UK and 1778 in the USA.  But I sense these figures do not reflect the large amount of unclaimed overtime that is done in Japan as a matter of course.

As the key to reviving Japan is improving productivity, the government has also take up various initiatives, such as this spring, when it announced it would raid any company where overtime exceeded 80 hours per month even for 1 employee.

Employees say they ignore the music, or if the lights go out-  according to anonymous sources interviewed by the Nikkei Business magazine –  they switch on their own personal desk lights or pretend to leave and then sneak back into the office.

As the Nikkei article says, the equation is not:

Overtime reduction = absolute reduction in work volume x more efficient working

It is:

Overtime reduction = absolute reduction in work volume x more efficient working x employees’ wish to go home

The third factor is the key point according to academic experts – Japanese have a relatively low interest in going home, so even if the company reduces their workload or promotes efficiency, overtime will not be reduced.

So why don’t Japanese want to go home?  According to Nikkei Business there are 2 reasons.

  1. Doing overtime is a way to get promoted.

According to the research conducted by an independent economics institute into the work habits and careers of the employees of large manufacturer in Japan, there is a strong correlation between hours worked and the rate of promotion. For females, working more than 2300 hours a year resulted in a 5 times greater chance of being promoted than working 1800 hours a year.  This is due to women who would have difficulties in working long hours being put in jobs where there is little chance of promotion, says University of Chicago’s Kazuo Yamaguchi.

The effect of working long hours has a less pronounced but still positive impact for men.

Whether it’s that you get promoted into jobs which require long hours or long hours that lead to promotion, it’s clear that in Japanese companies, if you do not work long hours you cannot get into the core group.

The current core group who are in their 50s and 60s remember the Bubble Era (the economic boom in Japan in the 1980s)when if you worked long hours you produced results, so they tend to evaluate well those employees beneath them who also work long hours, says Kengo Mochizuki, an employment lawyer.

Although studies show that working more than 50 hours a week reduces productivity and more than 63 hours or more begins to have a negative effect, “most Japanese employees don’t just care about their productivity but making sure they have created a niche for themselves.  They think the way to do this is not to be productive, but to be seen to taking on a mountain of work.”

2. No fun at home

However there are plenty of employees who are not that bothered about being promoted or earning lots of money and yet still do overtime.  This leads to the second reason – “even if I go home, there’s nothing fun to do”

The Nikkei tells of one employee who said he didn’t care if it was only him, but he would like his no overtime day not to be Wednesday.  When asked why, he finally revealed that his wife’s employer also had No Overtime Wednesdays, so if he went home, then they would both be there, and it would feel awkward.

There are men who don’t want to do the housework, and overtime provided a free pass on this.  Even women are using overtime as an excuse.  One woman in her 30s said that even on no overtime days, she pretends she has to go drinking with colleagues or customers and comes home at her usual time.

But it’s not only married couples.  The Nikkei Business magazine cites one 35 year old female employee at a printing machinery manufacturer.  When she was in her 20s she went to English conversation classes and networking events but since she became 32 she has lost interest in self improvement and her friends are all disappearing with marriage and babies “and I feel tired, so just listlessly do overtime – it’s easier than having to think too hard”

Dormitory towns say that they find their family restaurants, pachinko parlours and saunas are all busier than ever before on Wednesdays, full with people who have nowhere to go on No Overtime days.

The Nikkei found one 52 year old in such a family restaurant in Kanagawa prefecture.  He says on other days he usually leaves the office around 9pm.  He is not very busy but he does overtime anyway.  He does not go drinking with his colleagues as much as he used to.  His boss is a younger guy so it feels awkward to go drinking with him.

He doesn’t feel welcome at home.  He has teenage children but does not help with their upbringing. He stays out drinking and kills time by walking home.  “I wish they would stop No Overtime days” he says many times.

Chain restaurants and Starbucks have started catering to these “No Overtime Day Refugees” by offering alcohol and snacks in the evenings.  A “study café” has opened up where you can read, continue working or study and even bring your own food along from local convenience stores.

So what should employers do?  Obviously, as the Nikkei advises, they need to break the link between overtime and promotion, perhaps even giving poor evaluations to people who put in large amounts of overtime, as an example to others.

But what to do about those who do not want to go home?  They could just be left alone, to stay as long as they want, so long as they don’t claim overtime pay.  But there is a compliance issue.

The Nikkei recommends that overtime has to be applied for and if “difficulties in being at home” comes up as a reason for doing overtime, then this should be seen as a mental health issue.

The former President of Triumph International Japan was so determined to eradicate overtime that he made any employee who did overtime not only report it but also attend a Hansei meeting the next day, to see how any further overtime working could be prevented.  It soon became such a hassle for employees that most realised that it would be better to completely rethink their work/life balance and lifestyle so that they did not do any overtime at all.

As the Nikkei says, unless this harsh reality – that Japanese do not want to go home – is properly confronted, there is no hope of improving Japan’s productivity.

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