Shigenobu Nagamori founded electric motor company Nippon Densan in 1973 but it wasn’t until the late 2000s that he started on his overseas M&A buying spree, acquiring the automotive actuators and motors division of French company Valeo.
He began to realise that he would have to change the way Nidec worked in order to succeed overseas. According to a special feature in the Nikkei Business magazine, he was puzzled as to why Western employees worked shorter hours than in Japan and took more holidays, yet their companies’ performance was better than Japanese companies.
Many Japanese companies are looking to change their working patterns, under pressure from the Japanese government for ‘work style reform’ but “merely reducing hours worked will end in failure”. Nagamori was looking for a change of mindset.
One area Nidec tackled was unnecessary meetings. In just 4 months at one of their subsidiaries, Tosok, the number of types of meetings was reduced from 156 to 89, and their total occurrence was reduced from 716 to 440 a year. The number of hours spent on meetings fell from 533 hours to 240 hours a year.
Meetings that did not have a result were particularly targeted, such as the “related divisions information exchange meetings”. New rules were introduced such as:
- Meetings should only take 45 minutes, or 25 minutes for short meetings
- Participants should all be told the purpose of the meeting, the schedule and the expected results beforehand
- Only the absolutely necessary people should attend
- #2 should be reviewed at the beginning of the meeting
- 1 page per topic, distributed before the meeting
- At the end of the meeting, conclusions and homework should be agreed, and who is in charge of each action point
- The minutes of the meeting should be written during the meeting and circulated within 24 hours after the meeting
Another issue that was raised in the search for changing mindsets and work patterns was the continual missed deadlines for prototypes. Because the automotive industry has become so competitive, car manufacturers were shortening their development cycles. Trying to meet their short deadlines for prototypes was causing much of the overtime at Nidec. There was too much of a gap between the time when Nidec’s engineers discussed with the car manufacturers’ engineers and the order was officially made through the sales people.
So it was decided to make the order official once emails between then engineers reached a point of certainty. This shortened the gap to starting new development work by 3-9 weeks, with a significant reduction in missed deadlines.
The basis for these changes in Nidec’s way of working came from Nagamori’s appointed successor, Yoshimoto, who had become a Master Six Sigma Black Belt when he worked at GE.
Ensuring women are promoted
Initially Nidec hoped to set a target of women comprising 15-20% of managers by 2020, up from the current 2.8% but this has been revised down to 8%. “There is no point in forcing women to be managers if they don’t want to do it” Nagamori states. Reforms have been introduced such as being able to work from home, being able to shift working hours 1 hour either side of the set start and finish times and also being able to take holiday in 1 hour units. These apply to male or female workers, but are intended to make caring for a family easier.
Nidec has also invested in changing work patterns on the factory floor, with robotization and Internet of Things, as well as investing in management development, to empower managers to take decisions and also improve their English ability.
English language and management capability
The feature finishes with an interview with Nagamori, where he asserts that to reduce working hours, you have to improve productivity first. For example, in Japan it is common to make courtesy calls on customers without any real reason. It’s not a total waste of time, but it is not directly productive.”
“Japanese productivity is about half that of Germany. So we need to double our productivity in order to get to zero overtime. If you just cut overtime to zero, you have to either hire more people or cut salaries. Both would be a mistake.”
If overtime disappears, then juniors will no longer get overtime pay. Nagamori remembers a time when he too mainly used his overtime pay to live off, saving all his bonus and salary. “30, 40 years on, Japanese society has not changed” he points out. He says an employee wrote him a note to say that he had a loan on the basis of him doing 50 hours overtime a month. So if he didn’t get overtime pay on that basis, he would not be able to repay the loan.
So he currently tries to give the overtime pay reduction back half as bonus, and the other half as training subsidy. This is not the same for everyone – those with high productivity get higher bonuses. “It’s a big problem that currently those with low productivity stay late and get overtime pay and those with high productivity leave and have lower pay”
“About half of overtime is work that doesn’t really need to be done, so that’s easily got rid of, but the other half is necessary work, and reducing that is not so easy.”
“ The biggest revolution is to get people to recognize that overtime should be zero. ‘Look at the West, nobody is doing it’ you have to tell everyone”
“It’s not easy for Japanese companies to switch to Western ways of doing things. It’s a bigger revolution than when in the Meiji era everyone changed from wearing kimonos to western clothes”
Nagamori says the reason for the lack of productivity in Japan is firstly English language ability. “Phone calls take twice as long and you need to pay for translators for negotiations.”
“Also, managers lack management capability. They don’t question why their team are doing so much overtime. They don’t understand what their team are doing. If they said – ‘do this work and then go home’ then there wouldn’t be so much overtime.”
“In the West there are plenty of positions for specialists, but in Japan there are people who don’t have management ability in line positions.”
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