Japanese Business Blog - Rudlin Consulting

Mitsubishi Motors & Nissan – Is Ghosn prepared to try to nail jelly to the wall?

When it comes to the Mitsubishi group of companies (keiretsu), I did almost literally write the book (A History of Mitsubishi Corporation in London: 1915 to Present Day), although my focus was more on the way the pre-war Mitsubishi Goshi evolved into Mitsubishi Corporation, the trading company, and more specifically, its London office.

It’s generally perceived in Japan that the Mitsubishi keiretsu has been the most cohesive and robust of all the keiretsu (Mitsui, Sumitomo, Fuyo being the other main ones) but as you might imagine, the current Mitsubishi Motors fuel economy data manipulation scandal has put this to the test.

According to Nikkei Business magazine (April 22^nd edition, not available online), the cracks are appearing. Whereas in the previous Mitsubishi Motors crises (recalls for various defects in the 2000s) Mitsubishi Heavy, Mitsubishi Corporation and Bank of Tokyo Mitsubishi UFJ all stepped in and financial support came from Tokio Marine, Mitsubishi Electric and Mitsubishi Materials as well, this time seems different.

Even now, having been hit by the commodity price slump, the automotive sector remains an important profit generator for Mitsubishi Corporation as it is involved in the sale and financing of vehicles in Asia and Europe as well as engine manufacture. Mitsubishi Corporation also seconds quite a few employees to Mitsubishi Motors, including the current Chairman and CEO Osamu Masuko.

Other Mitsubishi companies do not have such ties. Even though Mitsubishi Chemical Holdings supplies products to the automotive sector, its main customers are Toyota and Nissan. Mitsubishi Paper also said “we are busy with our own affairs”.

It’s not just about whether the companies have business together, points out the Nikkei. It’s also an issue of corporate governance. The Mitsubishi UFJ Financial Group has been reducing cross shareholdings, where appropriate. Mitsubishi Corporation is also checking shareholdings regularly for rationale and yield and disposing of them as necessary. Presumably it is hard to justify “Protecting the Three Diamonds” as the sole reason for support, to external directors and shareholders.

The Nikkei sees this as a chance for the Mitsubishi group to embark on a delayed restructure [the article was written before Nissan stepped in to acquire a 34% share]. In previous restructurings, there was a discussion about selling off the largely domestic ‘mini-car’ business, so this might be finally realised.

A more recent article in the Nikkei Asian Review points out that a key question is whether Nissan’s CEO Carlos Ghosn’s aggressive brand of reform will suit the corporate culture at Mitsubishi Motors “where change is not exactly a buzzword”. The question I have is what the corporate culture of Mitsubishi Motors actually is, other than a reluctance to change. The lack of a clear definition of values and vision may indeed be one of the causes of the repeated scandals. There are the Mitsubishi Three Principles, but not all Mitsubishi companies showcase them, and they lack the strong philosophy and toolkit of something like the Toyota Way.

Along with my official book on Mitsubishi in London I wrote a further unpublishable chapter, called “The Vague Company”. It talked about the benefits and difficulties of having a vague, unspoken corporate culture. Employees can enjoy the sense of being treated like adults, to work out for themselves what the right “way” is, but it makes global expansion – particularly post-merger integration – highly frustrating, when new, hybrid cultures need to develop. As one frustrated American employee at another Mitsubishi group company said to me the other day “I can’t get a handle on what the Mitsubishi Way is”. It is, as we say in British English, like trying to nail jelly to a wall. I suspect Ghosn may quickly tire of this and use his hammer in more brutally effective ways.

For more on Mitsubishi Motors’ future, I recommend this blog post by my old friend and former head of corporate communications at Mitsubishi Motors in the Daimler Chrysler days, Jochen Legewie: http://www.cnc-communications.com/blog/the-future-of-mitsubishi-motors/

For more on Mitsubishi corporate culture, I have gathered some resources on Pinterest here

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。

East meets East: East Anglia to East Asia (via Europe)

When I first moved to Norwich, just under two years’ ago, my new bookkeeper unnerved me by saying “we don’t do euros in Norfolk”. A third of my turnover is in euros, so I wondered whether I had chosen the best location for my business.

It’s true that there aren’t that many Japanese companies – my target customer group – locally in East Anglia either. However, those that are here reflect the regional strengths in food processing and energy. Mizkan owns Branston Pickle, which is made in a factory in Bury St Edmunds and Marubeni is the owner of Seajacks, a Great Yarmouth based offshore wind power engineering company. Although car companies such as Toyota and Nissan are probably the most famous Japanese investors in the UK, Norwich-based Lotus is owned by Proton, a Malaysian company.

More recently, Japanese insurance companies have been on the acquisition trail, and this has an East Anglia angle too, as the companies they have acquired have offices in the region and are keen to shift more personnel out of the expensive City of London. One such client, as well as asking me to do some training for their office in Chelmsford, Essex, also sent me to their branches in Zurich, Amsterdam and Brussels.

I decided to take the opportunity of the Belgium trip to visit Bruges, intrigued by its similarities to and influences on Norwich. Flemish weavers, masons and goldsmiths settled across East Anglia throughout the Middle Ages, when Norwich and Bruges were Hanseatic League outposts. Bruges, like Norwich, was a thriving river port, trading in locally made cloth. Like Norwich, Bruges was largely bypassed by the industrial revolution and trade declined after its river silted up.

Now Bruges is mainly a tourist destination as well as home to the College of Europe. With the EU referendum going on, it seemed an appropriate time to visit the place where Mrs Thatcher made her famous 1988 speech against further European integration, which inspired The Bruges Group, many of whose members are behind the current campaigns for Britain to leave the EU.

The Bruges Group flavour of Brexiteer sees exiting the European Union as a means of ending European political and regulatory interference. However, talking to people in Norwich, the argument that obviously most resonates is that of getting back control of the UK’s borders, and preventing further immigration, particularly from Europe.

Other former Hanseatic outposts on the UK’s east coast have not fared as well as Norwich. There are unemployment hotspots yet large numbers of Europeans come to the region to help with the harvesting and production of food. Recent polls show the region overall is in favour of Brexit.

So what will Japanese companies do if the UK does leave the EU? I expect that those that have already invested – either because the UK had a strength in a particular industry, or they wanted to access the UK market – will stay. But those who use the UK as a coordination base for the rest of Europe, may well consider relocating or shifting any further investment into continental Europe.

This is really bad news for my business, as my best clients are the European HR departments of the regional coordinating headquarters of Japanese companies. One such client integrated all their back offices functions a couple of years’ ago, which meant they shifted their HR back office to Turkey, managed by a team in Portugal, and I have not had any business from them since.

The common market and free movement of people over the past 40 years in Europe has brought about a more integrated structure for most multinationals. The UK has benefited from this by becoming the main host of European headquarter functions – headquarters which generate direct and indirect employment. This has made London an expensive place to operate, so jobs are moving east, not just to the east of the UK, but to countries like Poland. I am also now looking to recruit a consultant in Poland. Ironically, most of the candidates have had experience working in the UK.

One of my other Japanese clients has started shifting personnel from London to Amsterdam. London will continue to be the EMEA (Europe, Middle East and Africa) HQ and Amsterdam will be the European Union HQ. So maybe that’s the way to go for British businesses, if we do leave the EU.

I already have had some business in the Middle East, and was recently asked if I could find consultants in Morocco, Tunisia and South Africa. It’s something I could do whether or not the UK is in the EU, so ultimately, I think we British businesspeople should be asking ourselves, is it really worth going through all the uncertainty, cost and bad feeling of negotiating our way out and then re-negotiating our way back in to trade deals, to be pushed into doing something we should be doing anyway?

I visited Great Yarmouth (another former Hanseatic League outpost) recently, to see an excellent production of the Tempest at the Hippodrome. It was part of the Norfolk and Norwich Arts Festival – which benefits from EU funding. I noticed that most of the cafes were run by Portuguese immigrants and as the one we wanted to go to for lunch was fully booked, we ended up in a local pub.

Initially, the atmosphere and menu brought me back to when I was a child in the early 1970s, before we moved to Japan and the UK joined the European Union. The UK seemed to be in permanent decline – shabby, with awful food and if you wanted olive oil to cook something better at home, you had to buy it at a chemist.

However, it turned out the pub stocked good local cider and beer and the food was well cooked and promptly served. On the way back from the toilets (spotlessly clean) I realised that quietly and efficiently running the whole operation was the Thai wife of the British owner.

This article appears in “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” by Pernille Rudlin, available on Amazon as a paperback and ebook.

Why is there no Japanese word for ‘risk’?

Listening, or rather looking at the presentation of Kazumasa Yoshida, the CEO of Emergency Assistance Japan, I was yet again struck by the fact that there is no direct translation in Japanese for the English word “risk”. Yoshida even had a slide to define “risk”, with “risk” written as “リスク/risku” in katakana, which is the Japanese alphabet used for borrowed, foreign words. His definition of risk was the potential for a crisis to occur, which if then becomes reality, is a threat, and then when there is harm, is a crisis.

Crisis is “kiki/危機” in Japanese, and “kiki” is sometimes used instead of “risku”. This causes problems when trying to distinguish between risk management and crisis management in Japanese. Risk management then becomes two borrowed foreign words “リスク・マネジメント/risku manejimento” and crisis management is the entirely Japanese “kiki kanri/危機管理”.

I asked Yoshida why there was no word for risk in Japanese. He said it was indeed puzzling, when you considered how prone to natural disasters Japan was. His view was that it was something in the Japanese mind-set, that cannot deal with a crisis in advance, only if it happens in front of their eyes. This, he added, is why Japan has not coped so well in terms of preventing natural disasters from turning into wider crises, as with the Fukushima earthquake.

This kind of explanation can shade into the Myth of Japanese Uniqueness/Nihonjinron school of thought, which I am not so keen on. My preferred explanation is a mix of more universal psychological, geographical and religious influences. Most humans are bad at assessing and dealing with risk, vastly overestimating the probability of facing situations they cannot personally control (airplane crashes, terrorist attacks) and vastly underestimating the risk posed to them by situations they think they can control, such as crossing the road, or skiing. So it’s the very fact that Japan has had a history of massive and regular natural disasters such as earthquakes, volcanoes and tsunami, that causes a numbness to set in. The Japanese expression “carp on a chopping board” springs to mind. Apparently carp, when faced with a chopping board, know the end is nigh, so stop fighting it and face the inevitable.

This kind of acceptance of fate, and seeing struggle as a waste of effort, is very much a Buddhist teaching. And yet, looking out of the window of a bullet train in Japan, you can see the enormous but often useless efforts being put into preventing a disaster from occurring or having an impact in Japan – the concreting of the bottoms of mountains and the sides of rivers to prevent landslides and flooding and the huge concrete boulders and walls that cover the coastline. But the markers left by previous generations who survived tsunami, warning that houses should not be built beyond that point, were ignored.

Japanese companies are riddled with processes for double and triple checking, imposed after a mistake has happened. When a mistake does happen, it is usually covered up rather than dealt with. A participant in one of my seminars told me how a misdirected client confidential fax, which ended up on the private fax machine of an elderly Japanese lady (fax machines are still quite common in private homes in Japan) resulted in the old lady ticking off a senior director, who then immediately imposed a “fax buddy” system on the entire company – Japan and overseas. Any employee sending a fax must be accompanied and monitored by another employee.

This story found its way into an article in the Nikkei Asia Review, by Michael Stott, a Financial Times journalist who heard it at one of our Japan Intercultural Consulting seminars in Japan. As his article observes, “the painstaking decision making processes, the elaborate corporate hierarchies, the extreme fear of failure and the entrenched conservatism have not changed much” for Japanese companies over the past couple of decades.

Yoshida had a clear recommendation for what Japanese companies should do, namely, appoint an executive to be responsible for “risk”. They should not be someone who has been moved horizontally away from business line management because they are deemed to be no longer effective (which would be a classic Japanese corporate resolution). They need to have the ear of the President and be able command business units on what they should do. It should therefore be an important and recognised role – either for a specialist, or be made as a precondition that any President should have occupied the role. And they should be someone who, as he put it, “doesn’t run away.”

Yoshida said the question he usually gets asked is how he ended up founding the company – which, as the name suggests, provides assistance to Japanese overseas who find themselves in life threatening situations. It would seem in itself to be a risky venture, given that Japanese notoriously won’t pay for something which is simply a service. As a consultant to Japanese companies, I do indeed recognise this problem. He said when he was working for Yamaichi Securities in Paris, he came across a similar French company and thought Japan could do with such a service and then what with one thing and another…

He did not need to specify – the name Yamaichi Securities alone tells the story for Japanese business people. It was one of the most famous casualties of the 1997 Asian financial crisis and the uncovering of illegal trading which in turn was covering up losses made on client accounts. The company’s last president made a famously tearful public apology on television. Unfortunately, lessons in managing risk do not seem to have been learned twenty years’ on, with a seeming procession of Japanese Presidents bowing their heads in shame at unanticipated risks and covered up mistakes which escalate into full blown crises. Judging by the other reactions to Yoshida’s presentation, the audience at least will be lobbying their companies to appoint a senior risk executive as a matter of urgency.

Bending over backwards to be inclusive

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

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

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

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

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

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

(This article first appeared in Japanese in the Teikoku Databank News in February 2016 and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.)

How regular is your Japanese company?

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

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

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

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

Top 30 Japanese companies in Europe 2021

FREE DOWNLOAD

Send download link to:

Japanese companies in the UK

FREE DOWNLOAD

Send download link to:

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.

“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.”