Non-Japanese people who work in Japanese companies are often shocked at how antiquated the IT is in Japanese companies, considering how much Japanese people love new technologies.
Why is this, and will COVID-19 force change?
The next in our series “Japanese Business Mysteries Explained in 5 Minutes”
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Read MoreWe’ve revamped our Rudlin Consulting YouTube channel, and posted our latest Japanese Business Mysteries Explained in 5 minutes video screencast – this edition is on falling asleep in meetings.
Why do Japanese people fall asleep in meetings? Is it you? Is it OK to do it in Japan? What can you do about it?
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Read MoreGermany has historically been the main rival to the UK in Europe for Japanese investment. The UK absorbs about 40% of total Japanese investment into the EU but according to the Japanese Ministry of Foreign Affairs, there are actually 50% more Japan originated companies (703) in Germany compared to the UK (471).*
The reason for this discrepancy in numbers may be to do with the difference in the sectors that are investing in Germany and the UK and also the scale of the companies that are being acquired. According to my own research there are more employees on average at Japan affiliated companies in the UK than there are for Japan affiliated companies in Germany.
This may be because the big employers – Japanese car manufacturers – do not have production in Germany – unlike the UK with Nissan, Honda and Toyota. There are plenty of Japanese automotive component manufacturers in Germany, but they tend to be what is known in German as “Mittelstand” or medium sized companies.
Manufacturing represents around 20% of German GDP, similar to Japan. Germany has of course always had a strong reputation for engineering and German cultural values such as risk aversion and process orientation fit well with Japanese corporate mindsets.
By contrast, only 11% of the UK’s GDP is derived from manufacturing and 80% of UK GDP is services, particularly financial services such as banking and insurance. This sector accounts for quite a few of the Japanese companies who have multiple subsidiaries in the UK, as well as trading companies, holding companies and services companies providing financing and other functions across Europe.
This might explain why UK has more Japanese residents than Germany – presumably acting as liaison and coordinators with Japan HQ for the region – around 63,000 compared to 46,000 in Germany. However, this number is falling for the UK, and increasing for Germany.
Does this mean that the UK is losing its role as the services centre for the region to Germany? Looking at the detail, it seems the main factor behind the drop in the number of Japanese in the UK is that there are 3,000 fewer Japanese students and academics in the UK compared to a year ago.**
Intra company transferees to the UK fell by 1% from 2015 to 2017 whereas there are now many hundreds more Japanese transferees living in Germany, the Netherlands and Eastern Europe than three years’ ago.
Looking at the recent investments into the UK and Germany, the trends of the past few years still seem to hold. Investments into the UK are in the form of establishing regional holding companies, or M&A in biotech, information technology and services for the UK market such as car parking. Investments into Germany are mainly for the wholesale of electronic components and machinery. Sometimes these are German sales offices for Japanese companies who already have sales or manufacturing in the UK. As manufacturing shifts eastward in Europe, so the sales hubs are moving with them.
The above article was written for the Teikoku Databank News in October of 2018. Since then, the Ministry of Foreign Affairs has published further data on Japanese nationals resident in Europe and Japanese companies operating in Europe, but unfortunately without the level of detail that was available previously.
The chart below summarises the data available for UK and Germany – showing the continuing long term trend of an increase in Japanese companies and nationals in Germany, and a decline in Japanese companies and nationals in the UK. Overall across Europe, the number of Japanese companies and nationals has increased in the past five or so years, but more in Eastern Europe recently.
This is reinforced by the data collected by Toyo Keizai of Japanese expatriates working for Japanese companies, which also shows that the increase in Japanese nationals in Germany is primarily in non-manufacturing, with a corresponding decline in Japanese nationals working in non-manufacturing in the UK.
*This is the number of individual incorporated companies in 2018 – if you include all branches, and multiple subsidiaries, the figure is 966 Japanese entities in the UK compared to 1,839 in Germany as of Oct 2018 MOFA report
** Based on later conversations with the British Council, this steep drop in Japanese students coming to the UK may well be to do with changes in visa categories that are being monitored rather than an actual decline – most Japanese students prefer to study abroad for less than a year.
The original version of this article can be found in “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” available as a paperback and Kindle ebook on Amazon.
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Read MoreMy husband is currently tanshin funin, (a Japanese term meaning living alone away from family for work reasons) working in a boarding school just too far away to commute home every day. His apartment is in a building which used to be a sanatorium, for isolating people with tuberculosis, before WWII. Before a pharmaceutical cure was discovered, the thinking was that fresh air and sleeping outdoors was the way to cure tuberculosis. Unfortunately, this means there are huge, drafty windows and doors in the apartment, so it is freezing cold, even though there is central heating.
Although fresh air and sleeping outside does not actually cure tuberculosis, it transpires that having well ventilated rooms was a very effective way of preventing other people from catching tuberculosis. Similarly, sleeping outside was not a cure, but staying horizontal helped relieve the symptoms.
This story of how tuberculosis was treated in Europe and now the spread of coronavirus around the world highlights how cultural differences might be rooted in each country’s history of disease. It also means there are still cultural barriers to selling healthcare products worldwide.
Medieval bubonic plagues in Europe were spread by fleas* and were controlled by quarantining households, cities and even regions. The cholera and typhoid epidemics in the 19th century were mainly caused by contaminated food and water, and controlled in industrialising northern European countries by improved public hygiene and sanitation for food and water supplies, and cured by the invention of antibiotics.
Japan suffered more from smallpox epidemics – since at least the 8th century. These mostly affected children. Smallpox is transmitted by prolonged physical proximity, particularly skin to skin contact. So smallpox epidemics in Japan were mostly managed at the family or village level.
I wonder whether this history explains why Japanese people to this day do not shake hands or hug and kiss as much as the Europeans do. It could also explain why Japanese people are still in the habit of carrying a handkerchief around for drying their own hands, rather than blowing their noses into it, as Europeans do.
In the UK, to prevent being infected by the coronavirus, we have been told to wash our hands with soap, or use hand sanitizers if water and soap are not available, and to blow our noses, sneeze or cough into paper tissues and then dispose of them immediately. We’ve also been told to avoid handshaking, which we do less than Germans do anyway, and we never kissed and hugged as much as the Italians do.
As a consequence of government advice, British shops have run out of hand sanitizers, but apparently the incidence of other flu varieties (which can kill 1000s a year in the UK) has dropped dramatically. Maybe we British had become too reliant on state healthcare and intervention and are now learning we have to take the initiative ourselves and go back to old methods – just as my husband did. He has bought an old-fashioned hot water bottle to keep himself warm. Old familiar ways provide comfort in times of crisis.
*Although there has been some interesting research suggesting the Black Death may not have been bubonic but an Ebola type virus
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Read MoreI’ve often felt that what I do as a trainer was similar to a stand-up comedy routine. Not so much that I try to make people laugh (although I do) but that I use the same tricks of the trade as a stand-up comedian – a core idea running through, the seemingly irrelevant anecdote that ends up making a key point, the call back at the end that reassures me and the audience they’ve been paying attention. I know I’ve had a good session if I’ve hit my marks – not in the literal meaning of standing in the right spot, but getting the rhythm and timings right, covering all the material, sensing the key messages have chimed with participants.
Watching some of my favourite entertainers cope with social distancing has been illuminating. It has shed light on the dirty secrets of how far entertaining or teaching at a distance can replace getting together in germ filled rooms.
I knew, but had not articulated, these dirty secrets to myself. I have struggled for around 20 years to make online learning and knowledge sharing work, believing it to be the future, but at the same time I kept having misgivings.
One of my favourite stand-up comedians, Stewart Lee, toured a show a couple of years ago called Content Provider – the brutal digital term for entertainers and teachers. As Lee pointed out in that show, the main way entertainers make money these days is by going on tour delivering the content in person, not from digital or hard copy sales. TV can be a steady earner of course, but Lee was never mainstream enough to attract consistently big bucks. He even supplements the revenue from tickets by buying up second-hand copies of his CDs and DVDs from charity shops and eBay and selling them in person at a profit in the auditorium after the show.
But, as he acknowledged in his most recent show, touring is exhausting, particularly as you get older. My fellow trainer in Germany in a recent Zoom call said she felt more relaxed than she had in some time, despite the lockdown, because she no longer had to travel so much for work. It’s not just the physical but also the mental exhaustion – you wonder if the same old shtick is going to cut it anymore.
So our training team is now discussing what the best way is to deliver our content, without so much travel, resilient to any social distancing, but still make money and stay fresh. Which is why we need to confront the dirty secrets head on.
My recent career has been in providing training to adult learners, but I come from a globally extensive, long line of teachers of all age groups. From talking with them about their experiences, I’m pretty sure that most of these dirty secrets apply to children’s education too.
The good news is that there are plenty of technologies when teaching or entertaining online that we are being forced to adopt which are worth continuing with even after we can all be in the same room again. The future is going to be a blend of online and offline presence.
The biggest dirty secret is that it actually costs quite a lot in terms of effort, time and therefore money to create good learning and entertainment that works at a distance. And yet the expectation is that it should be cheaper.
Why distance costs so much is due to the other dirty secrets:
This is why teachers are struggling to respond to the current crisis. They know that just slapping up slides online with your notes, or teaching a normal lesson via a webcam and providing a recording of it will not create effective learning experiences. But they don’t have the time to do much else.
The issue is not just participant engagement, but that bouncing off an audience is where teachers and entertainers get their energy from. You can spot when an audience is not engaged when you are in a room with them, and adjust accordingly.
When TV entertainers like John Oliver or Stephen Colbert initially tried to do their shows without live audiences, the result was very flat. You could see the desperation in their eyes. It was easier for team chat shows that transmitted live like Channel 4’s The Last Leg. They had already made use of Twitter in real time pre-COVID-19 to get audience suggestions and jokes from beyond the studio, so they made even more use of this to spark off their own interactions in the studio.
Even non-live shows are finding ways to use online tools to engage with their audiences – Graham Norton’s Red Chair stories are now delivered by audience members from their own homes, via their webcams. Many comedy chat shows have found that doing short interviews via webconferencing with celebrities, in their pyjamas, with pets, kids and other props, showing human frailties, can recreate at least some of the warmth and humour they crave.
For teachers and trainers the most obvious online tool to create engagement is polling. Polls can make sure people are paying attention, but also create a connection between participants and give the host a flavour of the needs and views of the audience. Webcams, Q&A and chat functions all help put the life back in to webinars – and yes, why not bring in props and pets too.
If you are creating learning that people consume in their own time, it still needs to be interactive – I’ve incorporated polls, quizzes and self-assessments into our online learning modules.
If you haven’t got a live audience you can interact with, you need to keep it short, and break it up. Graham Norton’s TV chat show used to be 45 minutes long pre-Covid, but is now a tightly edited 30 minutes of a monologue, a brief interview, some music, funny clips and the Red Chair.
I view the online equivalent of our 3-hour classroom-based training course as being a 1.5 hour webinar – and I put a break in half way just as I would for a classroom based session. Similarly, our 6 hour, one day course can be delivered as two 1.5 hour webinars on separate occasions. The online modules can be taken in the meantime, allowing the second webinar to be more of a review and discussion.
It’s generally considered that 45 minutes is the maximum you can expect an adult to pay attention. I’d assume it’s even less for children and for those of us who are used to consuming social media in short videos and 280 character chunks.
But schools do seem very wedded to the idea that a lesson should take 35 to 45 minutes and that it’s an important life skill that children stay still and quiet for this time. I really resented being called into school to be told off for the fact that my son refused to sit nicely on the story mat for half an hour aged 5 or that he’d yell out the answer to a question without waiting until the teacher called on him. My suggestions that it was unreasonable to expect children of that age to stay still without some kind of interactivity, and that they would be better off asking open ended rather than factual questions did not go down well. But then I regularly got thrown out of my Japanese school aged 7 for talking in class. Japanese schools are even more one-way information teaching machines than British schools. Ironically, my son’s school reports now complain that he’s too quiet.
So 10-20 minutes for an online “class” is surely more realistic than expecting children to sit through a teacher talking on a webcam on Microsoft Teams for 40 minutes. This seems to be what my husband and his fellow teachers are now doing – everyone logs in, the teacher asks how they are and has a chat, explains the assignment and then lets everyone log out again and do the assignment in their own time. Getting them to hand the assignment in seems to be a whole other problem, however.
Realising that my audience is not that into me either, I recently re-edited all our online e-learning content so no video/screencast that I have narrated is more than 10 minutes where possible. The most popular YouTube video I have narrated is “Japanese Business Mysteries explained in 5 minutes”, so I will be doing more of those in the future.
But that brings me to the third dirty secret. Not only are they not that into you, they’re not that into your content either. They’re either learning because it’s compulsory or to impress their employers. If they’re school children or students, the main motivator is passing the exam.
This is where the analogy with entertainment ends, I suppose – we consume entertainment for insights, emotions and to know we are not alone. There is no certificate for this but therefore there is a limit to how much a person will pay to be entertained, and they are always looking for ways to get their kicks for free. Which is why I sympathised when Stewart Lee confiscated a mobile phone from an audience member trying to film his routine at the last gig of his I went to.
Teachers at my son’s school have been dutifully setting further reading, challenging maths problems and suggesting resources to prepare for university for the year group affected by the cancellation of the UK national A level exams. Only work before March 18th will count towards the final grade, to ensure that children who are not able to access online learning are not penalised.
Despite the teachers’ efforts, I believe most engagement from that year group is through an app that one of them developed which automates logging in to Microsoft Teams – and occasionally they edit the message so it looks personal.
The only pure online training courses that sell are the ones that relate to compliance and are compulsory, or certify that you have acquired IT skills. This is the kind of knowledge acquisition that can be proved through online multiple-choice tests or online exercises. These courses generate a certificate for the learner and lots of lovely data on the company’s Learning Management System, to show what percentage of staff have taken the courses, passed the tests or said their work efficiency has improved, and then they can generate some kind of Return on Investment on training budgets to keep the CFO happy.
Individual learners are willing to pay for a certificate they can add to their CVs but otherwise expect content to be free. Massively Open Online Courses, or MOOCs, have a very high dropout rate. Coursera, an online learning platform mainly for university courses, has a business model based on exactly this understanding of the learner mentality. The University of Tokyo course on Japanese art and literature I took was free but they send you guilt provoking emails if you don’t complete each module within a certain time. If you want a certificate of passing and completion which you can load onto your LinkedIn profile, you have to pay. And so, although I took the course for the love of acquiring knowledge – reader, I paid.
Coursera have done a great job of making the user interface as easy as possible. This is where some of the benefits of being online come in. So long as firewalls and bandwidth do not intervene, it should mean greater accessibility to knowledge for people all around the world. Coursera videos are no more than 10 minutes long, each with a short quiz at the end to make sure you were paying attention. As well as the slides and a video of the professor giving the lecture, there is a transcript with a cursor indicating where the professor has got to in the lecture underneath the video. So if you haven’t quite understood, or your attention wandered, you can check back, rewind and pass the test.
Non-native speakers of English have been far more enthusiastic about e-learning and webinars than native speakers, in my experience. They like the multiple ways to absorb the information – slides, transcripts, aurally and offline. Native English speakers can help during live webinars by summarising key points in the chat function. The host also has far more control over shutting up domineering fluent speakers and making sure the shyer people are brought into the conversation – including through private chat if they’d rather not speak out publicly.
But – not everyone has the technology, bandwidth or budget to participate equally. Teachers at my husband’s well-funded private school have apparently broken down in tears from spending hours marking work online, only to see it disappear into the ether.
Maybe it’s their fault for not backing up, maybe the school has terrible connectivity, who knows. But it brings it home that things must be a hundred times worse for schools and homes where good technology and connectivity is just not affordable or people don’t have the technological knowhow to find solutions.
I realise this article may attract a lot of snark from specialists who have been studying interactive learning design for years, and know way more than I do about how to design learning paths and interfaces. In my defence, I did actually manage a team of people with that knowledge and AI programming skills, way back in the day. Our aim was to get away from directed learning and move towards self-directed learning. That is still my goal.
I attended various learning technology conferences too – where all too often a seminar entitled “making xml work in a corporate learning environment” or some such would end in a spectacular technology fail and blue screens all round. So yes, properly designed learning experiences are available online, but we are still a long way from the user or the technology being smart enough.
This is the deepest darkest dirty secret. We worry that if we do too good a job with online content and the technology does improve enough, we will no longer be needed. Teachers and entertainers want to be needed, even loved – and this is what we get paid for. This is known in business as self-cannibalization – making a cheaper version of your product or service, which then kills your lifeline.
But we should not despair, there are reasons why eating yourself doesn’t work.
If audiences can get the same experience from a CD, DVD or book, why do they continue to go to gigs, concerts, shows? Partly it’s the social experience – the thrill of being in a crowd of people who are going through the same emotions. The closest I have seen during lockdown to recreating the social experience of a concert is TimsTwitterListeningParty – where Tim Burgess of the 1990s group The Charlatans sets an album for everyone to listen to and tweet about in real time – but the real joy is that the original artist also tweets about the making of the record or photos of the band, in synchronicity to each track being listened to.
It’s also for the social experience that people still want to attend classes, despite moaning about being away from their real work. Even if children say they hate school, they want to be with their friends – and it’s usually because of a bad experience of being with others, such as bullying, that makes them hate school the most, rather than the teaching. And of course the teacher can do a lot to set the tone and clamp down on bullying.
Preferring to be in a room with others in order to learn is also an acknowledgement that if you’re not trapped in a class, you are very likely going to get distracted.
Also, in the corporate world, I have found that even when I was on the receiving end of poor-quality training, just being away from the desk and having time to reflect had a value in its own right.
The best concerts, exhibitions or plays are where you feel fully immersed – “lost in another world.” It’s not so easy to do that at home where daily chores and worries intrude.
A close second to being bullied as a reason for hating school is that it’s “boring and pointless”. In other words, children cannot see how what they are learning applies to their own life.
Many of the TV shows that have done well in the UK during lockdown are ones which allow us to live vicariously (and maybe thereby learn about) cultural experiences – Race around the World, The Repair Shop, or Grayson Perry’s Art Club
But not all teachers or subjects translate well to video, and learners still need to be able to interact with the teacher so that they can understand how to apply the knowledge to their individual situation. You can give individual attention and co-create online, but again numbers need to be limited to about the same as a classroom size, to allow proper 1:1 interaction.
The audience or learner wants authenticity – they can spot a mile off when a teacher or entertainer is phoning it in. This is why a lot of e-learning is so dry – actors voicing narratives about how to be a leader just do not resonate. The most popular YouTube videos are where the person is narrating in real time as they play a game. The first video that came up when I was searching for help on how to cut my son’s hair was a hairdresser in a barber shop cutting hair while explaining his technique.
We insist at Japan Intercultural Consulting that all our facilitators have authentic experience of working in Japanese organisations and also have lived in the counterpart culture. We also encourage our facilitators to tell stories from their own experiences during the training. Our participants need to feel that we have “been in your shoes”. But the only way we can be sure this happens is to interact with participants, to understand their experiences.
Parents are struggling trying to do home schooling and work at the same time. Schools were invented partly so people could go to work. Before universal education, only rich people could afford home tutoring, which then perpetuated the professional elite path of going to university to become a lawyer or clergyman.
The only way to work from home and teach your children at the same time if you are not rich enough to afford a home tutor is to teach them through the work you are doing. This was how craftsmen in the past educated their children – they were apprenticed to their parent or to another “master”. The modern-day equivalent would be getting your children to alphabetize your files, or helping you design a spreadsheet for your sales data – or in my case, getting them to edit and add subtitles to my videos.
Japanese companies are still resistant to classroom-based learning and even more so to working remotely, particularly for soft skills. The reason for this is that most Japanese companies are family style in mentality – learning is done through apprenticeship and on the job learning.
I admit I already loved Tidying up with Marie Kondo on Netflix, but it wasn’t just because it added to my Japanese cultural expertise – my obsession with TV decluttering shows stretches back to House Doctor in the 1990s and lockdown has impelled me to binge watch Call the Cleaners. There is something very cathartic and inspiring about watching other people confront their fears and phobias, purge and then move on with their lives, and this is what I needed to do with online learning.
Although we may have a sick feeling in our stomachs about the threat of technology, teachers and trainers will never have to eat themselves. So long as we are authentic and know what we are talking about, then we can help the learner apply the knowledge for themselves, and recreate experiences. We can set scientific experiments, maths problems and history essays to be done away from the classroom, in the knowledge that they need a teacher to guide them and check the result.
If, like now, we can only teach online, then rather than trying to dump a mass of information online or learn how to build an interactive module, we should focus on creating good offline assignments that guide the learner as they explore, apply their new knowledge and recreate experiences for themselves. But learner numbers will be limited if this is to be supervised and checked properly. Ultimately, the cost per learner in terms of time and salaries is not going to be much cheaper than a classroom-based experience if the assignment is well framed and resources are properly curated.
A teacher or entertainer in a germ-infested room full of people is still the most cost effective and emotionally impactful way of transmitting knowledge, insight and experience. Our enforced isolation as teachers and entertainers should be a time to declutter, focus on what sparks joy and maybe add one or two new gadgets into the freed-up space.
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Read MoreA 25 year old Sony employee, with a postgraduate degree in mechanical engineering and skilled in multiple programming languages was promoted to job grade I3 within three months of starting at the company. This meant his salary was increased by Y50,000 (US$460) a month and he can also qualify for higher bonuses. This would not have been possible until at least two years had been completed at the company previously.
This new system was introduced by Sony this year, whereby ability and work effectiveness are assessed and a grade from I1 to I9 is assigned. Sony had already restructured its management level from 2015. 40% of all employees were in management grades, due to the egalitarian, seniority based promotion system, but many were “name only” managers. The “name only” managers were all demoted to non-management grades.
Sony has to compete with GAFA (Google, Apple, Facebook and Amazon) for top talent, so the old Japanese mura (village) mentality where everyone is a member of the village, and treated equally regardless of their work content and where they work, with lifetime employment and seniority based promotion was not sufficiently attractive.
Now those who wish to join Sony can choose from 70 possible entry routes – those joining from university can choose 3 from the 70. It is not all controlled by HR as in the past – individual business executives are also involved in the recruitment process. They proceed straight to the job they have applied for, rather than go through a general training period.
The Nikkei wonders how this will impact firing, not just hiring. With the Japanese mura system, the ability to dismiss employees is severely restricted. Sony has said it can demote or refuse to promote people, but it will not fire them. Keidanren, the Japanese employers’ association, says that while it is generally in favour of HR systems becoming more focused on role content and performance, it thinks the Japanese approach of reassigning people to other jobs if they are not performing in their current role is still preferable.
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Read MoreFor some enjoyable lockdown escapism, and to learn about Japanese culture in the sense of its visual arts and history, then wow your Japanese colleagues with your knowledge, I recommend:
The ancient preliterate inhabitants of the Japanese archipelago marked the passing of time through the creation of monuments, including Jōmon stone circles and massive burial mounds. Archaeologist and Director of the Centre for Japanese Studies at the University of East Anglia Simon Kaner addresses how the preservation of these ruins speaks to an aesthetic of impermanence in a lecture and conversation with Adriana Proser, John H. Foster Senior Curator for Traditional Asian Art and curator of The Art of Impermanence.
Look out for Prof Kaner waving around extraordinarily elaborate Jōmon figurines and flamepots (could they really be used for cooking – or mixing Manhattans as he suggests?)
You can view this (1hr., 10 min video) lecture on Asia Society’s website.
Emeritus Professor at Tokyo University Robert Campbell has a lovely gentle manner and soothing voice delivering this online course on Coursera with great visuals on how Japan mixed visual imagery and literary texts. You can do all the modules and tests for free, but you may well end up paying the £37 to get a certificate on LinkedIn because you feel so pleased with yourself for passing and completing the course – I know I did.
“In their ambition to capture “real life,” Japanese painters, poets, novelists and photographers of the nineteenth century collaborated in ways seldom explored by their European contemporaries. This course offers learners the chance to encounter and appreciate behavior, moral standards and some of the material conditions surrounding Japanese artists in the nineteenth century, in order to renew our assumptions about what artistic “realism” is and what it meant.
You can find it on Coursera here
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Read MorePlenty of Japanese companies went virtual, scaled back, cancelled or postponed their entrance ceremonies for new graduate recruits this year, because of COVID-19. Hitachi had already cancelled its entrance ceremony, however, and changed it to a Career Kick-off Session (which has also been postponed) to mark the radical departure it has made from lifetime employment and seniority based promotion.
Since its record breaking loss in 2008/9, Hitachi has moved away from simply cutting employee numbers to reduce costs and instead radically altered its business portfolio and introduced a new HR system. President Nakanishi was responding to the often heard concern in the company that “we don’t have any leaders who are effective globally” – a major problem when Hitachi was moving away from being a purely domestic supplier to Japanese energy companies to be more active globally in social infrastructure.
In 2011 Hitachi tore down the 3 distinct layers of its old HR structure – Hitachi HQ’s own HR division, the HR divisions of the Hitachi group companies and the HR divisions of overseas subsidiaries. Now there is a global HR division, 30% of whose employees are non-Japanese. Each region reports into the global HR division, with Japan being one of the regions along with Europe, the Americas, Asia etc. The HR departments of the subsidiaries within those regions report into the appropriate regional HR division. This presumably means the group companies have far less autonomy and Hitachi HQ and Japan are just “one of” the regional or subsidiary divisions.
Hitachi also moved away from the “Shokuno” model much used by Japanese companies – where experience and potential of the employee are the key factors in deciding pay and grade to the “job” model – where each post carries a detailed job description and the pay is determined by the market rate for jobs requiring similar levels of skills and experience.
Toyota‘s President Akio Toyoda has also begun to have doubts about lifetime employment and seniority based pay. Last year, during the “Spring Offensive” when Japanese company unions negotiation with the directors on base pay, bonuses and conditions, Toyoda said “I have never felt such a distance between us as I felt this time”.
So in 2020 he introduced a new triangular negotiation structure – instead of unions and directors being face to face, he sat three groups around a triangle – the union, the management/executive officers and the board directors. From April of next year the use of evaulations in setting pay and bonuses will become much more widespread and automatic seniority based pay rises will cease. Differentials in bonuses will also become much wider from July of this year.
Similar changes are being made at LIXIL, Ajinomoto, Citizen, Sapporo Breweries and Eisai Pharmaceuticals. The end of lifetime employment and seniority based promotion is seen as mainly about trying to deal with the “hatarakanai ojisan” or “underworked uncle” – middle aged men who are in their management position and being paid accordingly largely because of the length of their experience in the company than the value they are adding.
The rest of the Nikkei Business special feature includes a handy worksheet for underworked uncles, to regain their motivation and revive their careers, with some case studies of career changers and encouraging words from recruiters. The recruiters say that middle aged employees are good networkers who can link their company to other companies and look out for new ideas, that they have good communication skills, a learning mindset and are good negotiators. Sounds like they are going to need all of these to succeed in the final 15 years’ of their careers, if they don’t want to end up gazing out of a window.
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Read MoreStrengthening human resources has become increasingly urgent for Japanese companies since 2017, rapidly catching up with improving profitability as the top management priority, according to a survey from the Japan Management Association.* Other issues such as increasing sales/market share, or introducing new products and services or reviewing the business portfolio are declining by comparison.
Nikkei Business looks at various ways that Japanese companies are dealing with this, including my old employer Mitsubishi Corporation. Their approach does not seem to be that different from 20 or 30 years ago, which is to treat everyone (at least, those hired in Japan) as if they have leadership potential and offer them opportunities accordingly.
The concern of companies (over 75% of respondents to a Ministry of Economy Trade and Industry survey in 2017) is particularly around having sufficient leadership and management resources within the next five years. This is not surprising as the cohort that would be entering into senior management are the group that were most affected by the Ice Age of recruitment, when companies drastically cut back their graduate recruitment in the 1990s to 2000s.
But part three of the Nikkei Business special indicates that the roots of this lack of leadership might be in a mismatch between the expectations of the younger generations and their managers too. New recruits are showing less interest in becoming President than in 1999, more interest in senior roles such as board director or General Manager, but interestingly, less interested in become a specialist.
The qualities of an ideal leader vary between generations too. In 1999 41.3% chose “someone who listens to the views and wishes of their subordinates” as an ideal quality, but this was chosen by only 26.8% in 2019. “Someone who gives directions politely” was the top choice (44.5%) of the 2019 new graduate recruits, but this was chosen by only 32% of new graduate recruits 20 years previously. The 1999 intake were significantly more keen on leaders who were passionate about their work than the 2019 intake, whereas the 2019 intake valued a leader who places importance on private lives, not only work.
Nikkei Business concludes that the type of leader needed has changed over the decades:
*Japan Management Association seems to have given up putting anything new in English on its website since 2017.
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Read MoreI’ve just recorded a five minute screencast explaining the mysteries of Japanese corporate hierarchies and job titles. I explain how the “three treasures” of the Japanese post war employment system are beginning to tarnish. Lifetime employment, seniority based promotion and company unions who negotiate base pay and bonuses are all applying to fewer people, or being tweaked to a more performance/competency based system, allowing mid career hiring.
Nikkei Business magazine has just published another article on this too, pointing out that Japanese people’s expectations of what the company should offer are changing as well.
It cites an anonymised case of a 41 year old male IT engineer, who left his electronics employer after 15 years, to work for a logistics company. He was partly worried about the financial performance of the electronics giant, but also felt that with digitization, it was time to apply his skills to a different company.
This might not seem so odd for a European or American employee, but up until recently, in Japan leaving a major company in your 40s would usually suggest you had been pushed out, and it would also have been difficult to find a job of equivalent status in another major employer.
Data from Japan’s Ministry of Labour shows that the average length of service of males under 50 is beginning to shrink. A survey from RecruitWorks shows that 60% of 35-54 year olds have changed employers at least once. The main reason given, according to a survey from en-japan employment agency, is that they don’t feel any engagement or sense of achievement at their current employer. This is cited more frequently as a reason for quitting than low pay or worries about the future of the company.
Nikkei Business magazine then goes on to examine what various Japanese companies are doing in response to this trend. Mizuho Bank has lifted its ban on employees being able to have a second job elsewhere. Up until recently, it was felt that allowing this would be a security risk as employees had access to confidential client data. Furthermore, it was more complex to manage the pay roll and benefits of employees with multiple employers.
So why did Mizuho change its mind? Partly it was because of the legacy of merging three banks, and the time and cost it has taken to integrate systems, branch networks etc. Mizuho is now looking to reduce its employee total by 19,000 over 2017-2027 so the unspoken contract that there is an obligation to offer lifetime employment has already been broken.
But a bigger reason, according to Nikkei Business, is that individual employees’ attitudes towards their company has changed. Rather than expecting to be looked after in terms of pay for life, they are interested in the company as a place where they are offered opportunities to grow, and new skills, so if they need to build those skills and opportunities outside the company, they should be allowed to do so.
Mizuho had become less popular with new graduate recruits recently, and is hoping that by being open to employees working outside the bank, graduates will see Mizuho more favourably again. The take up for applying to do second jobs has been across all age groups – including a 27 year old working for a start up through to a 57 year old working for a recruitment consultancy.
NEC has also been encouraging in-house start ups and set up NEC X to promote new business in Silicon Valley in 2018. Airconditioning manufacturer Daikin allows staff to focus on AI and IoT training and study for 2 years and brings in interns from Tokyo University to work in its operations around the world.
I know I would say this, but one chart that caught my eye in the article was the one showing that Japanese corporate investment in training per head fell , as did the proportion of Japanese companies funding training, after 2008 and has never returned to previous levels in the 10 years since. Japanese employees are getting the message that they cannot depend on their employers for career development.
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