Japanese Business Blog - Rudlin Consulting

Hitachi – we’re not heavy, dull or ugly outside Japan

Hitachi is seen as inward looking, conservative and lacking in commercial sense by business people in Japan, but outside Japan it is seen as a motivating place to work, exciting and cool by employees of Hitachi’s overseas subsidiaries such as Hitachi Rail Europe and Hitachi Data Systems, according to Nikkei Business magazine.

Could this help change Hitachi domestically? Currently Hitachi has over 1000 employees with PhDs working for them in Japan, generating many patents, but this technical strength does not seem to be translating into sales. The improvement in profits is largely due to withdrawing from unprofitable businesses such as mobile phones and LCD screens and also the contributions from social innovation business overseas. It is not due to any ground breaking innovation in products or services. It is also seen as being self centred, and not often forming alliances with other companies.

In the rail business however, Hitachi has taken the biggest share of rolling stock orders through to 2019 in the UK. Hitachi first opened an office in the UK for its rail business in 1999, with just one expatriate staffing it. It is now seen as the most powerful train supplier in Europe, according to an executive from Virgin Trains. It has had to completely overhaul its designs however, to cope with the UK’s old fragile railway bridges. Procurement specs for everything from engines, radiators and pumps were reviewed and the body used as much aluminium as possible to lighten the weight. “We were able to use all the expertise we had developed in Japan” says Koji Wagatsuma of Hitachi Rail Europe. “Hitachi’s strength is not just IT, but that we know the operational side of various industries really well”, says Shinya Mitsudomi, CSO of Hitachi Rail Europe.

The other secret of Hitachi Rail’s success is “true delegation”, says the Nikkei. Instead of relying on history and performance within the company, Hitachi has given responsibility to those who know the market best. There is a big difference between the UK and Japanese rail markets, in that the risks taken by the supplier in bids are much greater. It is necessary to guarantee how many people would be needed to run the system per year, and what the lifecycle cost will be.

Alistair Dormer, the CEO, has clearly been a driving force in Hitachi Rail’s success. He likes to hold regular town hall meetings, where he consistently promotes the company’s mission and vision. Ted Yamada, head of HR at Hitachi Rail Europe says “to hire the best people, it’s not just about the remuneration, but to make sure they can get a feel of the kind of company they are working for.” Not only the CEO but also the chairman of Hitachi in Japan, Hiroaki Nakanishi, is a good story teller. As I repeatedly point out in my training sessions, because most Japanese companies are the “family” type, storytelling and parent figures are far more important in giving direction than targets or strategies or policies or structures.

A further feature that Nikkei Business picks up on, is that Hitachi is beginning to pull together virtual company structures, most notably for Hitachi Data Systems. We were moving towards that when I was at Fujitsu – I think IT companies are probably best suited to this kind of organisation – where services have to be provided globally so it makes sense to have teams and hierarchies which span several regions. It does mean a lot of travel to work well – one Hitachi Data Systems director says he has 56 Japan entry stamps on his American passport. Conversely, Japanese engineers travel regularly to the UK and the US.

The feature finishes with an interview with Hiroaki Nakanishi, who comes up with a few punchy quotes. Asked about the impact of Hitachi putting non-Japanese at the top of various regions, he says it has an instant effect on the mindset of the Japanese employees, who now realise that they have to persuade a foreigner of their ideas, so all the “Japanese only” methods they have used in the past will not work. Consequently, decision making and execution have speeded up. Everything in the value chain from marketing to sales, development to production and after sales service have to be overseas. So it’s not possible for Japanese to be seconded abroad and manage everything. Most of the executives are local, non-Japanese. “Before now, Japanese companies would build a factory overseas, but just transfer manufacturing knowhow, and then when it was completed, the head of manufacturing in Japan would fly over and play lots of golf. That’s just no longer feasible.” Since Jack Domme took over at HDS, objectives have been set for individual employees and decision making has become more transparent. HDS is now well regarded by others as a company which would be an enjoyable challenge to work for. “Starting small and growing big is just fooling yourself – there are no dreams or hope in that. People with ambitions will not join such a company” says Nakanishi. “We are still a Japanese company, and so there will be some parts which are difficult for non-Japanese to understand, so not being Japanese might be a bit of a handicap” but maybe no more than Siemens is a German company, or GE is American, Nakanishi adds.

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The Bubble Gang – what became of my cohort in Japan

In the UK I would be regarded as part of Generation X but in Japan I am in the Bubble Gang, of people aged 45-49 who joined a major Japanese company straight out of university between 1988 and 1992 – at the very end of Japan’s economic “Bubble Era”. I graduated in 1988 but did not join Mitsubishi Corporation until 1990, spending two years at a US PR company first. And actually, because I transferred to Mitsubishi’s Tokyo headquarters in 1992, my company ID number started with 92, and I was therefore regarded as being a member of the 1992 graduate intake, despite my protests.

After a period selling building materials in Japan, I transferred to the HR department, where we tried to set up an international HR system which was intended to make the year of joining less relevant and therefore Japanese traditional seniority based promotion less rigid. This was meant to ensure non-Japanese, mid-career hires had more chance of being promoted appropriately, but twenty years on, elements of the old system still persist in Mitsubishi and elsewhere. I was given the title of manager at the time, but didn’t really manage anything in the Western sense of the word – having no team or budget under my control.

If I had stuck with the company into my late 30s I may well have become a ‘proper’ manager, attaining the kacho (team leader or section chief) grade under the Japanese system, and who knows, ten or so years later maybe even made it to bucho (General Manager – head of a department) as some of my friends from that time have recently done.

Contemplating that future at the age of 33, when so many of my MBA class were already running businesses, put a chill in my soul and I decided to leave Mitsubishi after 9 enjoyable years.

It’s not often you get a chance to see how your career might have panned out if a different choice had been made, but thanks to a special feature in the Nikkei Business magazine on the Bubble Gang, I now have more insight, and it has reassured me that I probably took the right path.

The article sets out the following phases:

Entrance ceremony day 1988-1992

So many new graduates joined – up to a 1000 in some cases – that the company has to hire the Budokan for the entrance ceremony

2-3 years on – Japan’s “Loadsamoney”

A separate envelope full of cash is handed out at bonus time, making a 24 hour working day bearable. Hanakin (Flower Friday – the equivalent of POETS day in the UK) drinking to the small hours, including Y50,000 bottles of champagne and waving Y10,000 notes to flag down taxis

5 years on – the Bubble bursts

It’s a slow burst, from the initial bubble burst in 1990, when asset prices started to plummet, through to 1997, with the Asian financial crisis, and the collapse of Hokkaido Bank, the Long Term Credit Bank of Japan and Yamaichi Securities. Friends start to lose their jobs. The wife wants to go back to her family.

10 years on – no team, but performance based pay introduced

Companies like Fujitsu and Mitsui introduce performance based and potential based pay systems. You start to worry about what level of bonus others in your cohort are getting. Due to a hiring freeze, you don’t have any juniors working for you, so end up having to do admin work yourself.

15 years on – the company recovers, but your pay doesn’t

Thanks to a cheaper yen, exports boom and the company results improve, but your pay level does not. Some of the other high fliers in your cohort make it to kacho, but you don’t. Your daughter, whom you struggled to get into a private high school, seems to have lost her mojo too.

20 years on – the Lehman Shock

Every industry suddenly goes into recession. Elpida Memory enters bankruptcy and Panasonic and Sony are in tatters. You start to envy the old guys with their golden goodbyes and full pensions.

25 years on – what do I do now?

Sharp seems to be on its last legs, Toshiba is hit by an accounting scandal. Is my company OK? Drinking with old friends, there are more grey hairs and wheezing than before. Even your highflier friend has applied for early retirement. Younger colleagues are looking at you, still only a kacho, coldly. Should I stay or start my own business or change companies?

The feature then looks at the fate of one man at Sharp. He is called to a seminar by a department called “People Making”, which appears to him to be a firing squad. They show him a chart of the pay offs available to people of his age under the voluntary retirement scheme. He then has a meeting with his General Manager, who tells him to stay. His colleague of the same age is not so lucky, and is told that as there isn’t a job for him, he should contact the employment agencies who are both under contract to Sharp to assist with re-employment, elsewhere.

It seems to be a repeat of the mid 1990s, when HR departments used similar tactics to get rid of the bulge of post war baby boomers, who joined companies in the late 1970s. Apparently the Bubble Gang are the biggest cohort in most companies, comprising 1/6 of the total employees, but only 1/3 have made it to kacho or bucho level.

In response to this, over 60% of companies surveyed by the Nikkei have reviewed their seniority based pay system or introduced voluntary early retirement schemes. Conversely, 59% of the Bubble Gang, the highest percentage of all the cohorts, feel their company has betrayed them – either because they were not promoted as expected or their pay level is not as they hoped. However the vast majority want to continue working for their company, at least for the time being. No surprise really, because you have to wonder how easy it is going to be for someone who has worked for the same company for 25 years to find a job elsewhere.

Branding without egotism

Another survey on the top 100 global brands has just come out, and yet again Japanese brands are not punching their weight, considering the size of their revenues and the Japanese economy. How you measure brand value is of course a contentious point. It’s often an attempt to quantify how much it would cost to buy the brand, based on some kind of residual figure from the value of the company – having subtracted all the other assets – as well as qualitative research on customer evaluations.

Some of the Japanese corporate names missing from the list would come nearer the top if only Japanese customers were surveyed. But even then, I’m guessing the monetary value that could be attached to the brand would still not be as high as for some Western companies, due to the fact that Japanese companies don’t focus so much on profitability, or even “branding”.

Discussions about brand with Japanese executives seem to indicate that they see a “brand” as mostly about advertising and visible forms of identity such as logo and image.

To compete on a global basis, Japanese companies need to understand better what Western customers expect from a strong brand. But there is a danger as well in becoming too focused on brand, to the extent that it becomes a form of egotism, and prevents collaboration.

It’s been over 15 years since NTT DoCoMo Inc launched its i-mode service, putting Japan far ahead of any other nation, even the US, in terms of customers using sophisticated mobile phones to purchase applications and content on the internet. The rest of the world wondered ho to replicate Japan’s success, and many speculated this could never be reproduced outside of Japan because of some kind of special cultural characteristics of Japanese consumers and society. Now, looking at the global success of the iPhone and other mobile technologies, there is no doubt that consumers across the world will buy applications and content for their phones, given the opportunity.

My view is that took the rest of the world so long to catch up because non-Japanese network providers and mobile phone handset manufacturers were so busy protecting the profitability of their brands, that they were unable to replicate the mutually beneficial supply chain ecosystem that DoCoMo built up in Japan.

When I went to Japan in 2002, assisting a British mobile phone application developer, DoCoMo refused to take the credit for a particular image recognition application that it was offering, saying they were only a network provider, and we should talk to the application developers. The application developers said they just provided applications for whatever features handset manufacturers were incorporating. The handset manufacturers said they were simply humble suppliers to the network operators.

Now, with the advent of cloud computing, and an increasingly networked society, Japanese companies are wondering how to compete against the likes of U.S. online titans like Amazon and Google. Strengthening their global brands will help, but they should not lose sight of the fact that a key element of many Japanese companies’ brands is their ability to collaborate, without egotism.

This article originally appeared in the Nikkei Weekly

Diversity on boards in UK and Japan

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

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

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

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

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

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

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

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

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

Shazai and the art of being a corporate shame magnet

I let out a quiet cheer recently when Mitsubishi Materials, a sister company to my old employer Mitsubishi Corporation, started down the road of apologising for using slave labour in WWII. I used to be on the receiving end of campaigns for apologies and compensation from British Prisoners of War (PoWs) when I was in corporate communications at Mitsubishi Corporation and had many debates with my Japanese colleagues on what the right response might be.

Mitsubishi Corporation is a completely different company now in terms of ownership and structure to the Mitsubishi conglomerate during the war. The founding Iwasaki family was, however, not only pro-British, but also Iwasaki Koyata, the President during the war, was liberal and progressive in inclination, and rather bravely (given that other business leaders were assassinated for not being supportive of the militarist coup) spoke out against the war. The view amongst many Mitsubishi people after the war was – it was the government that forced these actions on Mitsubishi then, and it was the government that rightly said sorry and paid compensation to the PoWs afterwards. If there was a need to punish Mitsubishi as well, then the fact that the Iwasaki family and most of the senior managers were removed from their posts and the conglomerate was broken up under the Allied Occupation is surely sufficient.

Why apologise when it is not your fault – and wouldn’t such an apology be meaningless, almost insulting anyway? Actually there is a word in Japanese for apologising when it is not your own personal fault, but some kind of collective acknowledgement of responsibility is needed – hansei. It means reflection on what went wrong, an expression of regret for it having happened – “it shouldn’t have happened” and, most importantly, a commitment to take action to make sure it doesn’t happen again. You can see why successive Japanese prime ministers who weren’t personally involved in the wartime government might have thought this word adequate, as it appears to reiterate Japan’s commitment to remain a pacifist nation.

However equivalent words with the same linguistic roots exist in Chinese and Korean languages and consequently, Chinese and Korean activists do not accept hansei as being strong enough. The problem is it doesn’t contain enough shame. Owabi is a stronger word for “apology”, and contains a character which involves the symbol for “household”. This was the word used by previous Prime Ministers Tomiichi Murayama and Junichiro Koizumi, in addition to “hansei”, when apologising for Japan’s actions during WWII. By saying owabi, you are being remorseful and acknowledging the shame brought upon your group – whether it be your family, company or country.

Whether current Prime Minister Shintaro Abe will or won’t use “owabi” in his speech marking 70 years since the end of WWII has added poignancy, because not only will he be recognising the shame brought upon Japan (which could argue with some justification that at least it didn’t vote for its fascistic government in the 1930s, unlike Germany) but there is a family angle too. Abe is the grandson of Nobusuke Kishi, a Class A War Crimes suspect who was never tried for his part in the Japanese occupation of Manchuria and the use of Chinese forced labour, and went on to become Prime Minister himself in the 1950s.

In societies with elements of Shintoism or Buddhism or Confucianism underpinning it, as in Japan, Korea and China, apologizing on behalf of your predecessors or ancestors is hard to do. Not so much out of a sense of unfairness, but because you are visiting shame upon their memory, when they are no longer alive themselves to deal with it, and so the shame will simply be visited upon you and your peers and family. It feels like an unproductive humiliation, to be forced to attack your forebears, whom you were taught to respect.

The more usual pattern in Japan is for the father or elder to apologise for the sins and errors committed by the junior family members. This was seen most recently when Akio Toyoda apologised following the arrest of Julie Hamp, his personal appointment as Toyota’s global corporate communications chief, for illegally importing opiates into Japan. He even referred to her as one of his own children and then apologised for causing consternation to everyone, rather than any breaking of the law. The words used were yet another way of saying sorry – taihen moushiwake gozaimasen – “there is no reasonable explanation/excuse”. With this he became the shame magnet, taking the hit for Toyota not having somehow prevented her from making a mistake.

Universalist Westerners found this apology perplexing. Their view is that she was an idiot for not realising what the law was, or a criminal for deliberately breaking it. She should therefore be punished, and then maybe can rebuild her career after redemption. Universalists believe the rules are the rules and apply to all, without exception, in contrast to particularists, who take each case on its own merits, depending on the relationships of the people involved.

The Judaeo-Christian view as represented in the Old Testament is somewhat confused – both stating that the sins of the fathers will be visited on the third and even the fourth generation, but at the same time making it clear that the person who sinned is the soul that must take responsibility and be punished. Modern Western ethics, while seeing it as unfair that future generations should be punished for past generations’ wrongdoings, also insist that current generations acknowledge the crimes of the past in order not to repeat them.

In this sense, there is a common thread between East and West. Shame and admission of past guilt are both mechanisms for making sure that the sin is not committed or recommitted – because it is not just you, but your sons and daughters who will suffer the consequences.

By choosing to apologise in English, in the USA, Mitsubishi Materials avoided an oriental linguistic and ethical minefield, for the time being. The question of whether or not Mitsubishi Materials should accept shame will undoubtedly come up when, as they have promised, they apologise to Chinese and Korean forced labour survivors. I sense they were able to start with the apology in English as a warm up to this, with coaxing from Yukio Okamoto, a retired diplomat and renowned smooth operator who is now an external director at Mitsubishi Materials. He does not have to worry about the shame brought on his predecessors, as he is not an insider, and he also probably made sure the word “remorse” was used in English. I would imagine he also understood well the Western mentality that it is not about a Buddhist sense of collective shame so much as a Christian individualistic need to confess sins, publicly take the punishment and thereby gain redemption, allowing all to move on. Or as popular psychology would have it, giving the victims a sense of closure, which will make everyone feel better as a result.

Post confession, there is a sense of relief and a way to move on and move forward – and that is why I cheered when I read the coverage of Mitsubishi Materials’ apology – everyone behaved with dignity and sincerity and there was a sense of positivity. The Japanese participants seemed to have overcome the fear that with shame, there is no redemption, it endures, and it affects the whole group.

The worry is that if the shame magnet-father figure is not strong enough, the wider society will keep pressing until a bigger magnet is found. This is currently being played out with Toshiba’s accounting scandal. Despite the top executives resigning, bowing down for a record breaking 15 seconds of shazai (another word for apology, which contains the character for sin or guilt) and using the word owabi, the pressure keeps on. Hardly a day goes by without someone in the media questioning whether the root causes have really been exposed and whether enough has been done to redress them.

When the Nikkei announced its acquisition of the Financial Times, many Westerners commented that the Nikkei gave Olympus too easy a ride for its financial misconduct, unlike the Financial Times’ investigative approach. Compared to Toshiba, Olympus is not as iconic a company in Japan, therefore there was less sense of a wider reaching shame. Toshiba, however, was one of the Denden Kousha ‘family’ (suppliers to NTT when it was part of the ministry of telecommunications) and continues to be very tangled up in government industrial policy – most recently in joint ventures with another shame magnet, TEPCO of Fukushima infamy, acquiring a majority share of US nuclear power company Westinghouse in order to promote Japanese nuclear power capabilities overseas. Hisao Tanaka, the President who led the apologies and resignations, is seen as the fall guy. Even though his predecessors also resigned, the worry is that the shame is not just on Toshiba, but the Japanese political-industrial nexus as a whole. As Mitsubishi Materials has shown, the industrial side of Japan is beginning to find their shoulders are broad enough to take the hit and move on, whether the political side is too, Abe is about to demonstrate.

Do companies have a social obligation to train employees?

I was surprised when the Japanese expatriate manager at a Japanese logistics firm told me recently that he thought British logistics was more advanced than logistics in Japan. When I returned to the UK after working in Japan for four years at the end of the 1990s, I remember thinking that there was a real business opportunity for a delivery service in the UK similar to Japan’s takkyubin. This thought came to me as I watched an enormous container lorry reverse very cautiously up the 19^th century narrow alleyway to my London apartment, when all they were delivering was a small armchair. Surely in Japan this would have been delivered in a much smaller van, and within a much shorter time frame, so I would not have had to wait in all day for delivery.

Thanks to the rise of internet shopping (the British are the biggest web shoppers in Europe, apparently) and also the liberalisation of postal services, takkyubin type services like MyHermes have now appeared in the UK. You can book a time slot for next day pick up from your house, online, and the prices are cheaper than taking it to the post office, for heavier items.

I assume that similar services are available from takkyubin companies in Japan, so I suppose what the Japanese logistics manager was referring to was the higher volume end of logistics in the UK – transporting large quantities of car parts across Europe, for example.

Although it is possible to get qualifications and even university degrees in logistics in the UK, all the British employees of the Japanese firm at which the Japanese manager worked were in agreement that expertise in logistics was only really developed through practical experience, over time, rather than learning the latest theories in the classroom. In that sense, they were much more in alignment with Japanese apprenticeship style “on the job” training approaches.

As the Japanese manager himself pointed out, the firm’s employees were very indigenous British. Normally when I do training sessions for Japanese companies in the UK who are in the financial or commercial sectors, more than half the employees are not British.

Maybe for those types of companies, attitude and ability to learn are more important than local market expertise, skills and experience. But for logistics and other traditional, highly skilled industries such as engineering, it is tempting to choose someone who already has the local understanding and the expertise and skills born of experience, rather than train someone up.

Such people are scarce in the UK and the rest of Europe however, and instead we have a stubborn youth unemployment problem, of young people who would rather do physical work, or work outside an office, but have not had the training or experience and cannot find stable jobs.

No wonder then that Hitachi Rail has teamed up with other companies to set up a new University Technical College in the north of England. Apparently they were worried they might have to poach employees from nearby Nissan, otherwise.

This article was originally written in Japanese for Teikoku News and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

Japanese companies need to pull up younger burdock roots if they really want to grow globally

Along with “tako tsubo” (octopus pot), another Japanese concept “gobou nuki” (plucking out burdock roots) used in HR has been deemed harmful to corporate Japan’s global prospects.

The term has been used frequently in the Japanese media recently, according to Masahiro Kotosaka, an ex McKinsey consultant now at Ritsumeikan University. In a recent article in Nikkei Business Online he points out that the recent appointments as President of Takuya Hirano at Microsoft Japan, Tatsuo Yasunaga at Mitsui & Co, Koji Arima at Denso, Tatsuya Tanaka at Fujitsu and Takahiro Hachigo at Honda have all been described as plucking burdock roots, as they are in their 40s or 50s, younger than normal for Presidents in corporate Japan. The average age of Japanese Presidents was 62 in 2014 (up from 61 in 2013), around 10 years higher than the global average.

The older age is of course partly explained by the continuation of seniority based pay and promotion in Japan – although Panasonic, Sony and Hitachi have all recently announced they are abolishing or looking to abolish this system.

The average age in Japan for a “kacho” (section head, the first managerial position in Japanese companies) is 38.6 and 44 for a “bucho” (department head, or General Manager) according to Recruitworks. In India, China or Thailand, the average is 9 years lower for kacho and 10 years lower for bucho. Even the US average is 5 years lower for both positions.

Kotosaka asserts that Japanese companies need to start pulling out younger burdock roots, people who might be future executives, and making sure they have early leadership experience. If this does not happen, the younger generations of Japanese will soon feel a big gap with their overseas peers.

Already Kotosaka has heard (as I have) from Japanese companies that they feel the utilisation of non-Japanese or external executives has increased and the presence of Japanese executives has faded.

The most notable example is of course Christophe Weber, President of Takeda Pharma, and his team of 16 executives, of whom 8 are non-Japanese and have come from outside the company and two are non-Japanese who joined through being executives in a Takeda acquisition. Weber had his first leadership experience at the age of 29 when he became a country manager at GSK. Carlos Ghosn of Nissan also became head of a factory at the age of 27.

My former employer Mitsubishi Corporation is mentioned as an honourable exception to the lack of experience given to juniors, along with gaishi (foreign owned) consulting companies and private equity firms. For such companies, people are the main asset, and it’s true I suppose that trading companies such as Mitsubishi that have now moved more towards acquisitions rather than trading, do afford ample opportunity for younger Japanese to take up management positions abroad. In practice though, I have seen many instances where the acquisition is left to manage itself, and the Japanese expat director mostly stays in the regional headquarters, processing paperwork to send back to Japan HQ, rather than hands on managing the business.

Why Japanese companies don’t use LinkedIn (but should)

I read in the Nikkei newspaper recently that Panasonic, Mitsubishi Estate and Rakuten are planning to make use of social networking site LinkedIn for recruitment outside Japan, including Europe. LinkedIn is the world’s largest professional networking site, based in California, with more than 270 million users worldwide, so it certainly represents an effective way to identify and attract new recruits.

I have been a member for more than 10 years, not to find a job, but to network with my European contacts in Japanese companies. It has been noticeable, however, that Japanese employees and Japanese companies in general are not very active on LinkedIn, even though LinkedIn launched a Japanese version and set up an office in Tokyo in 2011.

I assume this is primarily because LinkedIn is used for mid-career hiring and job seeking, which is still not a popular activity in Japan. Indeed, many Europeans dislike to display their skills and experience publicly, and signal thereby that they may be “for hire”. Based on my own analysis, the British and Dutch are not so cautious, whereas the privacy conscious (and possibly less comfortable in English) Germans and French hold back.

Many of my German contacts use Xing, a Germany based social networking site instead. However all Europeans (and people in multinationals in emerging markets such as Turkey) are aware of LinkedIn, and will take a look at it when they are considering moving to another company.

In other words, from an employer perspective, LinkedIn is a tool not just for searching for recruits based on skills and experience, but also for the company to present an attractive profile.

I recommend that any Japanese company reviewing their LinkedIn presence first of all ensure that the “official” company LinkedIn page is clearly labelled as official (to distinguish it from an alumnus site page run by an individual), and employees are encouraged to link their personal LinkedIn profiles to this official page.

More often than not, there are several pages already existing for the Japanese company. This needs to be tidied up, so that there is a headquarters page (in English), and any regional company pages are clearly identified as such. It is possible to interlink the regional company pages to the headquarters page, to show they all belong to the same company family.

These official pages need to be managed by someone either in marketing or HR at the headquarters and regional subsidiaries. They need a description of the company, including size, activities and a link to the correct website. The pages also need to be “branded” to look visually appealing and reflect the company image. Use should be made of the facility to add descriptions of products and services and add news about the company.

If this is done correctly, then “followers” of company will swiftly increase, both from potential recruits and also current employees, who will feel much happier now their employer has a clear and attractive LinkedIn presence they can associate themselves with.

(This article was originally written in Japanese for the 9th April 2014 Teikoku Databank News, and appears in Shinrai: Japanese Corporate Integrity in a Disintegrating Europe, available as a paperback and e-book on Amazon.)

Japanese companies demand too much perfection

Okada Hyogo, senior manager at Microsoft in Singapore, sports what is known in Japanese as the ‘Regent style’ hairdo – apparently named after Regent Street in London, but usually known in the UK as a DA. He is photographed with his quiff, leather jacket and sunglasses for a recent interview with Diamond Online. He has written various articles for the magazine, including one entitled ‘60% is good enough’. The impact of Microsoft on his thinking is clear, in the way he recommends Japanese companies also adopt the “patch” mentality he saw in software development. “Aim for what is feasible, not the best”, was his lesson from his time working for Accenture in the USA.

He echoes a point I often make in my seminars about the Japanese pursuit of perfectionism, which is that the 80/20 rule kicks in when it comes to costs of making an effort. It can take 80% of effort, resources and time to achieve the final 10 or 20% to reach 100% perfection.

This might work in Japan where it is normal to work through the night to achieve “the best” but of course this kind of behaviour is not so well accepted outside of Japan. As Okada says, in some cultures a person who works late is regarded as someone who is not self disciplined. “They have a much stronger sense of priorities than the Japanese do.”

“Japanese are lacking individual ‘core values’. At Microsoft we have 6 core values upon which we base our daily work. They are ‘Willingness to take on big challenges’,’Integrity’, ‘Openness’, ‘Constructive self criticism’, ‘Accountability’ and ‘Passion’.” Akiyama Susumu, the interviewer and President of Principle Consulting Group responds that it helps to define your own core values if you interact with people who are different to you.

As for being able to speak English, Okada believes it’s not enough by itself – an open and forward looking mindset is needed. “You need to be interested in the other person, and be prepared to engage in discussion.” Akiyama says it’s tempting to become silent if someone else in the meeting speaks better English than you do”. Okada responds that he got over his own English complex when his boss said “you already speak English. What’s important is knowing what you want to say, and how you want to progress the discussion.” Okada’s recommendation, to those who are not confident about their English is to get to a meeting 10 minutes early and greet the other participants as they arrive with “nice to meet you!” or “Good morning!” – that way you get warmed up for communicating and also you ensure that you have a presence at the meeting.

Even in teleconferences he recommends getting a question in early like “when can I expect to finish this meeting?” as a warm up, otherwise you end up not saying anything. For presentations he uses physical warm ups like a few squat thrusts and also practicing his “Rs”.

Another tip for meetings is to get near the whiteboard and offer to write up the agenda and minutes on it. “That way you look intelligent and hardworking!”

He also recommends saying “Let me finish” and using your hands to signal this. “Japanese tend to preface their requests too much”.

He finishes by saying that Japanese companies don’t have a very good image in Singapore as employers, and this has an effect on the brand too. Japanese employers are seen as only promoting Japanese people, and demanding a lot of unpaid overtime. Products have too many unnecessary features which only appeal to Japanese, rather as Japanese companies unthinkingly promote uniquely Japanese ways of working – such as chourei (daily morning team meetings). There is not one Japanese company in the Singapore Top 100 employers chosen by students.

“Locally hired Japanese don’t last long. After 6 years I felt I was turning into an idiot, so I left”

A new employment category, the ‘limited permanent employee’ has emerged in locations such as Singapore, where there are many locally hired Japanese employees, according to Diamond Online. They feature an interview with an anonymous former ‘limited permanent employee’, Mr A, of a major Japanese securities house’s Singapore subsidiary. According to Mr A, the category was somewhere between a contract worker and a permanent employee, and involved being treated in a way that resulted in him leaving.

Diamond journalist Norifumi Yoshida believes this category looks like to catch on in Japan too, to keep a cap on the ever expanding, insecure and badly paid “contract staff” category, in accordance with the government strategy for revitalising economic growth, while at the same time being easier to lay off than the traditional permanent, lifetime employee.

Mr A had been working for a major Japanese manufacturer, and was posted to their Singapore operation. He left the company while still in Singapore. He tried to start up his own IT company, but that failed. Then he heard that the Japanese securities company was looking for an new IT manager so interviewed for the position and was appointed. He was 35 when he joined the company, on around Y3.5m (US$28K) which was at the higher end for Singapore. However the Japanese expatriate IT manager, also 35, was earning around 3 times this.

There were around 150 expatriates from the Japan headquarters, including around 20 general managers who were in charge of the front and back offices, aged around 35 to late 40s.

These 20 had graduated from Japanese universities and joined the securities house straight after graduation. They had worked in Japan for 10 or more years and spoke good English. They initiated sales of securities or bonds and negotiated with local Singaporeans. They were also in IT or accounting or finance. They were good all round players but not professionals or specialists.

There was a second group of people amongst the 150 or so ‘permanent staff’, the front office people – 40 or so traders. They were ‘Anglo Saxon’, types who had worked for American or British firms previously, usually having been transferred to Singapore with those firms. They frequently changed employers, in some cases up to 10 different employers. There were a few Japanese traders, but most of them were not, and they were mostly rewarded through commissions and were often paid more than the Japanese expatriates – several hundred thousand dollars on average.

Mr A is not against this as such – in fact he points out that without these kinds of salaries, it would not be possible to hire highly skilled people, and if the company tried to stick to old ways of equal pay for all, it would surely collapse. Yoshida wondered whether Japanese companies aren’t using this as an experiment, and soon this system will be imported back into Japan.

Mr A felt the unfairness was more around how the third group of ‘permanent staff’, the ‘limited’ permanent staff, were treated. These people were mostly locally hired Singaporeans, on low level jobs, and accordingly paid low wages, with no prospect of promotion or transfer. At such low wages, it was not possible to hire high quality local staff anyway. The head of the IT department was Singaporean, and of the 12 staff in the department, 2 were Japanese expatriate staff and of the remaining 10, Mr A was the only locally hired Japanese. “Locally hired Japanese don’t last long. After 6 years I felt I was turning into an idiot, so I left”.

Both Mr A and the interviewer agree that treating all limited permanent staff the same way, without opening up any opportunities or pay rises to the more high potential or high performing staff will result in more dissatisfied and overworked locally hired specialists, who will keep quitting their Japanese companies. Mr A clearly feels very bitterly about generalist lifetime employees, who have no specialist knowledge of IT, being paid three times as much as him, plus expatriate allowances. “Globalization means the company has to become more focused on competency.”

Personally, I’m not so sure this is a new thing for Japanese companies in the global financial services sector. I remember a friend of mine from university being warned after he joined a Japanese securities house in London in the late 1980s, that locally hired staff were either “whores” or “coolies”. And locally hired staff in Japanese companies in quite a few sectors will ruefully recognise the “no prospect of promotion or transfer” limited permanent staff category.