Japanese Business Blog - Rudlin Consulting

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.

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

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

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

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

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

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

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

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

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

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

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

IBM Japan’s secret restructuring manual

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

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

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

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

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

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

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

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

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

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

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

Japanese employees’ justified fear of being expatriated

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

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

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

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

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

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

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

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

“Japanese companies are too scared to touch their overseas acquisitions” – Nidec’s Nagamori

Shigenobu Nagamori, the billionaire founder of the world’s biggest manufacturer of micro-motors for hard disks and optical drives, Nidec, has acquired more than 40 companies in Japan and overseas. He comments in a Nikkei Business article that “you cannot just leave foreign acquisitions alone to get on with things by themselves. You need thorough mutual understanding and to even replace management if necessary.”

“Although you no longer hear about Japanese companies sending lots of managers over to their overseas subsidiaries who end up issuing all sorts of misguided directions, you now hear of companies who say ‘we think the same way as the counterpart management’ and so decide to buy the company and then just leave the management as is.”

“This is an illusion. Actually they are being left alone because the Japanese company doesn’t really understand what they are doing. It ends up with compromising on the necessary management reforms and profit targets.”

“I have regrets myself. We acquired 10 or so companies in Europe and North America from about 2010. We were warned by various companies who had M&A experience and financial institutions that we couldn’t restructure foreign companies the way we would Japanese acquisitions and that it was best to ‘leave it up to the foreigners’ otherwise they will quit”

“I thought that was true at the time. I also took on board the advice that Japanese managers needed to be people with Harvard degrees and a network amongst foreign executives.”

“However one company did not make any improvement no matter how often I set profit targets. I thought there must be something wrong with the company management as such a company should as a matter of course achieve profit margins over 15% but I was told that it was the limit for their industry.”

“In Japan you would try to persuade the management to adopt our “kaizen” knowhow (knowledge of how to improve) but we hit a wall with this in the West. So in 2012 we changed the management of the acquired company. But you can’t do it like pulling a trigger. I make a point of visiting each company at least once a year and have dinner not just with the executives but also the managers and discuss things with them. I also encourage them to send emails directly to me and I respond to them. I am trying to understand all the ideas people have for improving profitability.”

“It’s important that people in the company understand my thinking and I understand whether they are capable of understanding. If they are then it doesn’t matter if the CEO is changed. ”

“It’s the same in Japan. Communication is important. If you just cut back costs and improve profit, the company will not survive in the long term. Where is there waste, how can we make the most profitable products – the basics are the same in Japan or elsewhere. If this is understood, then overseas companies can be reformed too.”

“I think Japanese companies are too scared to touch their overseas subsidiaries. They overthink the differences. I used to be like that, but there is no need. The basics of management are the same everywhere.”

Will there be a return on sending Japanese interns abroad?

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

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

Inclusive words

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

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

Sometimes I find myself thinking that all this emphasis on terminology is irritating and a distraction, but then I remember what it felt like to be a foreign employee in a Japanese company headquarters. I have no complaints about the way I was personally treated, but I regularly used to point out, when asked for my input into English language documents like the annual report – that it seemed alienating to people outside of Japan if employees were broken down into male/female, or Japan-employed and overseas-employed. I knew why these categories existed – because at the time, 99.9% of females were in administrative track jobs, and 100% of men were in management track jobs – so this was a simple way of indicating the ratio of administrative versus line management/sales 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.

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”.

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.)

Brexit is already priced in – the failure of British soft power

I’m on what has become an annual business trip this time of year, to Duesseldorf. Just before my flight out of London City Airport, I met with one of our Japanese corporate clients in the City, who told me that they are about to establish their European Union headquarters in the Netherlands. Brexit was not directly mentioned as the reason for this, more that “compliance and regulatory issues” made Amsterdam the preferred choice. The EMEA (Europe, Middle East and Africa HQ) will remain in London. The Amsterdam office will be beefed up and some of the regional functional people are being transferred there from London. This is precisely the sort of gradual drift to the Continent that I fear will follow an actual Brexit – and it is happening already.

Arriving at Duesseldorf airport, I was struck by the clear division at passport control between “EU Citizens/Burger” and “Other Nationalities”. An EU blue path (that made you feel it was a red carpet) took you to a completely separate set of passport officials. In UK airports, the different lanes are side by side, and it’s often quicker to go to the “all passports” queue than wait in the EU queue. There is no mention of us all being “citizens” either in British immigration control. Some Brits may find this willingness to treat us as equal citizens of Germany somewhat troubling from a historical perspective, but I felt rather flattered.

Then on to my hotel, with a huge array of channels including BBC World. But there was no signal for the BBC channel. So I ended up watching some fascinating documentaries on the cultivation and cooking of lotus roots, and Indonesia’s fad for J pop Wotagei dancing on NHK World instead. Japan/NL/Germany soft power 1, British soft power 0.

Governance – interview with Yoshimitsu Kobayashi, external director at Toshiba and Tokyo Electric Power

Yoshimitsu Kobayashi, chairman of Mitsubishi Chemical Holdings, seems to be attracted to intractable problems. Not only has he become an external director of Tokyo Electric Power Company, post Fukushima but is now also a director of Toshiba, as it goes through a massive restructuring of its business, following its falsified accounting scandal (see our previous post – Toshiba – where did it all go wrong?). On top of all that he is also the chairman of the Japan Association of Corporate Executives.

Asked by the Nikkei Business magazine why he has taken on both TEPCO and Toshiba, he explains that he regards both as extremely important to the Japanese economy. “Nuclear power is a Japanese national policy, and Toshiba is a national policy company. If it is damaged, then it is damage to the whole Japanese economy” (as we explained in another post Shazai and the art of being a corporate shame magnet). “That doesn’t mean we have to preserve it at whatever cost. We need to be open about all the bad parts of Toshiba, and take responsibility for explaining what happened. Then we can rebuild. Governance needs to have concrete substance, not just on the surface.”

Nikkei Business calls 2015 “Year Zero of Corporate Governance” for Japan. Kobayashi says it will take 10 years to change corporate culture at the roots. Toshiba and TEPCO resemble each other, he thinks, in that TEPCO is learning to be a privately owned company, that looks after public infrastructure, which is similar to Toshiba.

“Aspects of Japan that had been good such as life time employment and seniority based promotion have now become a minus, and Japan has lost its competitiveness. Companies should not rely on politicians. It is not just about deregulating but changing the spirit behind the regulations.”

Kobayashi points out that while Japanese companies have been investing large amounts in overseas M&A, domestic M&A is still a fraction of that. There are 3 nuclear power companies, 8 car companies and yet 20,000 chemical companies. As a consequence, research and development is behind the West and China.

“What’s key is for Japan to keep hold of its traditional technical strength, but work out how to team this up with services.” “Mitsubishi Chemical Holdings is doing this – working on new materials, for the environment and healthcare… and also for light weight cars”.

Kobayashi also believes that top executives in Japanese companies should walk away once they have finished their stint as chairman. However he think that it takes 10 years at the top to really understand a company. The Toshiba system, whereby Presidents only stayed in post for 4 years, but then carried on for many years after as advisors was not healthy. “Maybe it’s because their remuneration is not as high as in the West that they stick around. Dow Chemical’s CEO is earning 50 times what I earn. Although Mitsubishi group companies don’t have so much cross shareholding in common now, we keep an eye on each other’s governance, so oldies are not allowed to hang around”

“Toshiba has a surprising number of businesses. In companies like that where there are many capable people, there are a lot of big fish swimming in small ponds. They think they are the company, and forget the public interest.”