Yet again the changes being trumpeted in the Japanese business press that Japan’s influential trading and investment conglomerates are making to their HR and internal systems seem rather less radical to those of us who have been watching them for decades, but I will try not to be cynical.
Sumitomo Corporation is enabling third country transfers of staff – in other words someone locally hired outside of Japan transferring to another location. An HR manager from Mexico was posted to New York, someone from the Life Sciences division of their China subsidiary transferred to Australia and someone from the metals division in South Korea moved to Japan and then to Houston. We tried this at Mitsubishi Corporation 25 years’ ago with some limited successes. Theoretically it is the right thing to do, as it is more or less impossible to reach senior management levels in Japan’s trading houses without having experienced a stint outside Japan – and then only if you are Japanese.
The business reasons are clear too – it’s not easy to develop overseas business that is not reliant on Japanese suppliers or customers in some way if you only have Japanese staff working on it. And overseas is where the profitable growth is. Sumitomo Corporation points out that the percentage of profit that its overseas business represents has increased from 45.9% in 2010 to 56.4% in 2020.
We found when we tried to do more third country personnel transfers in the 1990s that many capable people hired overseas just weren’t able to move to another country, for family, financial or legal/political reasons. The real elephant in the room though is that there were not that many employees hired overseas that the elite who had joined Mitsubishi Corporation (and similarly Sumitomo Corp, Itochu, Mitsui, Marubeni) would consider their peers, even with the requisite overseas experience.
It’s a vicious circle – if you don’t offer the possibility of working globally and in the headquarters to people hired outside of Japan, you will not attract the ambitious high fliers. So Sumitomo appear to have tackled the other obstacle we came up against at Mitsubishi – the disparity of remuneration and benefits if you do try to transfer people from one country to another – by introducing a common Global Mobility Policy so that people receive the same benefits and pay regardless of where they originate from.
Trading companies very much rely on individual employees to be proactive in finding roles and developing new business and obviously it is necessary to get more non-Japanese staff to do this too. However if you look at the directors and executive officers of the Big Five, only Mitsui has 2 non-Japanese external directors. Actually this is a step backwards – Mitsubishi Corporation had at least two non-Japanese directors on the board in the 1990s as far as I can recall.
Mitsui was also in the business news recently. It has just moved to new offices in Tokyo and has introduced DocuSign – an electronic signature service – to the whole company in an attempt – made even more urgent by COVID-19 – to wean employees off the dependence on stamping documents in person with their seal of approval. Mitsui has also stopped assigning seats to each employee – there is only room in the new office for 70% of staff at any given time. Each person instead gets a locker. One of the reasons for hotdesking and DocuSign is to encourage people to go paperless – it becomes too cumbersome to lug armfuls of files around the place so electronic document systems become the easier option. Mitsui used various international law firms and local partners to check that DocuSign was acceptable overseas too. Unsurprisingly some Japanese government departments resisted, but it seems they too will have to change. The new Prime Minister of Japan, Suga Yoshihide has made digitization of Japanese government a priority and administrative reform minister Kono Taro has declared war on hanko personal seals and fax machines.
As for the latest changes at Mitsubishi Corp itself as it tries to catch up with Itochu – well – please see our next post.
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