Women in Japanese companies

Arab and Japanese Culture

An Arab participant in one of my seminars in Dubai last month suddenly put up her hand and blurted out, “I recognise this so well in my family!” when I was describing Japanese group orientation and non-verbal communication and concepts such as “ishindenshin” and “omoiyari”.

I asked in what way she thought Arab people and Japanese people were similar, and she told me that three generations of her family live together, just as traditional Japanese families used to. One evening, her grandmother asked her “what are you thinking of eating this evening?” The young woman was actually about to go and get a McDonalds hamburger, but recognising that her grandmother was hungry, asked her what she would like to eat. Her grandmother said “oh I am not hungry. I don’t need anything.”

So the young women went to buy a take away traditional Arab meal. When she offered it to her grandmother, her grandmother refused it. So they started to eat, leaving a portion with her grandmother, who then finally started to eat it.

This is not the first time I have been told by an Arab person that Japanese and Arab cultures have a lot of similarities. When I ask why, they mention a mix of family orientation, a strong relationship orientation in business, respect for seniors, and, as the young woman’s story about her grandmother illustrated, being very indirect in expressing needs.

So you would think it might be easy for a Japanese person to fit into the Arab business culture, but actually there are two issues for the many Japanese expatriates working in Dubai that make this less easy. One is that Dubai itself is one of the most multicultural cities in the world. 88% of the population are not Emirati. Almost everyone is a guest worker rather than having permanent residency. So Japanese expatriates in my workshop had to cope with many nationalities on their team, ranging from Europeans to Indians to Lebanese.

Secondly, group orientation means that there is a clear sense of in-group and out-group. Expatriates in Dubai find it very hard to become an “insider” in Dubai society. For example, amongst Arab business people, during Ramadan, it is customary to visit customers’ houses in the evening for the meal which breaks the fast. Hospitality is another very strong cultural value in Arab culture. Nonetheless, I can imagine you would have to be a very brave person to turn up at a customer’s house if you weren’t an Arab yourself.

So Japanese companies have done the sensible thing, which is to hire young local Arab graduates, offering them training and a career paths. However, there is huge diversity even amongst Arabs. Sitting next to the headscarf wearing woman who told me about her grandmother was the other graduate recruit, another young woman, wearing an abaya (traditional Arab dress), but with her long hair uncovered. She had been educated at an international school, and felt more close to the American cultural values I described.

This article appears in Pernille Rudlin’s latest book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” available as a paperback and Kindle ebook on Amazon.

For more content like this, subscribe to the free Rudlin Consulting Newsletter. 最新の在欧日系企業の状況については無料の月刊Rudlin Consulting ニューズレターにご登録ください。

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:

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.
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.
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.
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.

The tragic limitations to Japan’s lifetime employment system

Since 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:

Strict terms of employment, so when there is an an economic downturn, the employee can be reassigned
Seishain as fixed costs, so it is difficult to transfer over non-regular staff into the system
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
Irrational human resource allocation because of features of the system such as retirement from line management at 55
Difficulties in utilising seishain who have household or elderly care duties
A reduction in pension and health insurance benefits because of transferring to a smaller company from a larger company
The risk of losing the element of salary that was based on seniority if you change employers
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.

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.

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.

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.)

Are you ‘regular’? Probably not, if you were hired outside Japan, or female

My first essay on Japan, a thesis for my Modern History & Economics degree, was on the day labourers in post-war Japan and the so-called dual labour market. It’s with a sinking heart, nearly 30 years’ on, that I have to acknowledge that the concerns I had then, about the harm done by erecting an impermeable wall in a labour force between ‘permanent’ and ‘temporary’, continue to this day, when thinking about how to improve diversity and inclusion in Japanese companies.

The Japanese word for “regular” or “permanent” or “lifetime” employee is seishain. The character for sei can also mean “proper” “right” or “honest” and shain means employee. This says it all really. Technically, seishain are people who join the company as new graduate hires, on or around April 1st, in a cohort. They usually don’t have a formal employment contract or job description, but the unwritten agreement is that they will be rotated through a generalist track, and will agree to be moved to whatever location that might involve. In return for this flexibility they are guaranteed management level jobs and salaries after a certain amount of time, and will not be forced out of the company until they reach retirement age. Even when they reach retirement age, the company will make efforts to re-employ them, off line management. The salaries may be modest, but there are plenty of benefits and the company union (membership is automatic for seishain) will protect them at least until management level.

There are no barriers as such to women (or non-Japanese) joining the seishain track, but very few do. When I first started working at Mitsubishi Corporation in Japan, there were plenty of women seishain, but they had joined the administrative seishain track – so-called Office Ladies – which meant that they had not signed up to be rotated or relocated and were therefore not candidates for management positions.

Like many Japanese companies in the 1990s, Mitsubishi Corporation abolished the Office Lady track, as it was becoming uneconomic to have so many administrative people on seniority based pay, and numbers were rising beyond what was needed for increasingly automated office support. The assumption had been that women would leave as soon as they got married, or at least once they had their first child, but in fact women were getting married later or not getting married at all, or not having children, and staying at the company.

Once the Office Lady track was removed, if there was a further need for administrative staff, companies hired temporary workers to fill administrative positions. Similarly, for manufacturers in Japan there was a steady increase in the number of factory workers who were on short term contracts. Overall, the Japanese workforce is now heading towards 40% being on short term or part time contracts. But as I have written in a previous article, in some white collar sectors this actually led to too many disengaged support staff making too many errors, so some Japanese companies have quietly reintroduced the Office Lady track.

The assumption is that to become a manager, you need to have worked in several locations

Those women who were already on the old Office Lady track were offered the chance to shift into what Mitsubishi rather clumsily called “kouiki jimushokushou” which meant “wider area administrative roles”. The “wider area” referred I think both to the idea that they could be relocated and that their job content might be broadened, as a path towards the management track. They could undergo training and take various tests before making a full transition to management.

To this day, most Japanese companies operate on the assumption that to become a manager, you have to have worked in several locations and if the company is globalising, to have worked overseas if you want to be a senior manager.

So, you can probably see where this is going in terms of hitting Prime Minister Abe’s targets for the percentage of women who should be in management – even if there are plenty of women employees, most of them are not viewed as “proper” management material. They are more often than not on part time or temporary contracts. I even heard recently about some Japanese women who were on the management track, who asked to be expatriated abroad (because they had already studied abroad or been brought up outside of Japan as child, so had the linguistic ability and resilience needed), but had their requests refused. They then quit the company and moved to Europe or the USA under their own steam, to do MAs and MBAs, only to find male employees, sponsored by Japanese companies, on the same courses “learning to be global” but still far less effective than they were.

So, one solution might be for Japanese companies to track these women down abroad and try to lure them back into management positions. Actually, some of them are consultants at the company I represent in Europe – Japan Intercultural Consulting. As my informant said, they might be open to moving back to Japan under the right circumstances, because many of them have older parents living there they feel obligations towards. But they know that they will still somehow be regarded as not quite ‘proper’.

Another solution to making Japan HQ management more diverse, in terms of gender and nationality would be to have more non-Japanese employees in management positions there. The official objection usually given to this is that there is too big a language barrier. But of course the real issue is again that people hired abroad are not viewed as seishain. Until Japanese companies address this taboo on non-seishain becoming managers in more than name, the “inclusion” part of Diversity & Inclusion is a long way away.

For more detail on the technicalities of regular versus non-regular status in Japan, and how overseas employees might be classified, and some figures for the Top 30 Japanese employers in Europe, please see the next post.

Inclusive words

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 in the workforce. The Japan-employed and overseas employment figures aligned with the tantai (unitary – Japan entity only) and renketsu (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 seishain (lifetime employees) has disappeared in many companies. With holding companies now being allowed, and changes in accounting methods, the tantai and renketsu distinction for employees is also less meaningful than it used to be.

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.)

The Rebirth of the Japanese Office Lady

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

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

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

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

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

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

Diversity on boards in UK and Japan

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

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

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

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

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

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

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

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

This article was originally published in Japanese on 8th July 2015 in the Teikoku Databank News and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

Category: Women in Japanese companies