Keeping face

Trying
to entice Japanese employees away from national firms is never going to be
easy. But with the right package and a HR department familiar with the
different cultures in place, it is possible, writes Pepi Sappal

Imagine
this scenario: A Japanese family man in his mid-30s, who is in a top management
position, announces to his family that he is considering moving jobs to work
for a western company. It is certainly not a happy state of affairs. Even his
in-laws, who until this point held him in high-esteem, are furiously sucking
through their teeth, wondering why he wants to leave a prestigious Japanese
firm that offers a great salary and benefits such as housing, for a risky
foreign one.

It
is a common reaction. "If a western company shuts down or downsizes, he
not only risks being unemployed and back at his in-laws with his tail between
his legs, but there’s also a huge loss of face – unless he takes what is
considered the more honourable option, which is to commit suicide," says
Lance Richards, international HR consultant at Washington-based HR consultancy
Suddenly Global.

As
a result of deregulation, and with the prospect of getting a foothold in what
is considered to be the second largest economy in the world, an increasing
number of foreign firms are entering Japan buying distressed assets and
companies. But despite the country’s troubles, many of these outside firms are
finding it difficult to attract key talent, even though unemployment is on the
increase.

According
to the Japanese Institute of Labour, the economy is continuing to deteriorate.
And despite Prime Minister Junichiro Koizumi’s efforts to conquer Japan’s $91bn
in bad loans and restructure the economy, unemployment is continuing to rise to
record heights (it stands at 5.5 per cent and is expected to increase to 6 per
cent this year).

Despite
this, unemployed people seriously think twice about joining a foreign company.
"The main reason is because the western business model is all about
disposability – an easy come, easy go mentality – which is not only frowned
upon, but feared by the Japanese," says Richards.

It
is a well-founded fear. "When things get tough, foreign companies tend to
shut-up shop," says Kevin Gibson, managing director of the Tokyo office at
recruitment consultancy Robert Walters International. "Gateway Computers,
which recently had to pull out from Japan, is a case in point. Investment banks
such as Merrill Lynch and Morgan Stanley have also scaled back, letting go of
hundreds of employees in the process. So it is no wonder the Japanese are
suspicious of foreign firms."

The
past 10 years of economic turmoil has certainly forced Japan to change its
cradle-to-grave mentality. And given that big Japanese companies such as
Toshiba, NEC, Fujitsu and Mitsubishi have also had to scale back in recent
months, you would assume that the Japanese would now be more receptive to
joining western firms. "But that’s not always the case, especially among
the more qualified, senior level candidates," says a HR director of a
UK-based international hotel chain.

It
is easier to entice younger people away from Japanese firms with the promise of
more money and fast promotion. "But luring away senior people already in
secure jobs at Japanese firms – usually the prime targets – who are still
enjoying the perks and security of lifetime employment systems, isn’t so
easy," says Kayoko Tomoikari, president and consultant of US-Japan Virtual
Consulting, based in California.

It
is not just the money thing, but a face issue too. "You could compare
lifetime employment to that of a traditional marriage," says Etsuo Doi,
chief legal counsel at ebay.com in Tokyo. "Once you are employed in a
traditional company, you do not change firms, and if you do, especially for one
that’s not as prestigious (Japanese or foreign), it is frowned upon, much in
the same way as divorce."

So
you can understand the reluctance to move. "It’s also rare for a Japanese
person to accept a job offer from a foreign firm without the approval of their
family," says Gibson. "Unfortunately, in many cases, the father or
grandfather will veto a move, especially if they don’t recognise the brand, or
it’s not comparable to prestigious names such as that of Sony or Toyota. So in
these cases, it is not unusual for recruitment consultants to meet senior
members of the families to try and convince them otherwise."

Although
things are changing, few doubt that Japanese companies will completely give up
the lifetime employment system. Those that are forced to change, are doing so
kicking and screaming. "Everyone is aching for the past, where older
employees become window flowers – where they are given a window desk and fewer
tasks until they officially retire rather than lay them off [out of respect for
their elders]," says Larry Cambron, president, Asia Pacific, of global
career consultancy DBM. "In this culture it is not easy to break
relationships that have endured several decades. And when companies are forced
to make redundancies, there’s a loss of face for the company, as well as the
individual. So to maintain face most companies will hire outplacement services
to show support through a difficult transition."

Yet
even when western companies do find recruits who are prepared to swallow their
pride and join them, they often lack the skills required. According to
Tomoikari, very senior people usually lack the necessary transferable skillset.
"Although many senior people have been rotated around different
departments, they are generally only familiar with the system of one company,
and would therefore have problems adapting to a western style of
management."

Given
all these obstacles, how does an outsider go about finding qualified Japanese
recruits? It is important to look at firms such as Virgin and
PricewaterhouseCoopers that have been relatively successful in the market.
"It takes time, money and a steely resolve to establish credibility in an
expensive place during difficult times," says Gibson.

Yet
it is something outside companies are going to have to invest in if they want
to make headway in Japan. "Although most Japanese candidates prefer to
work for a local company, senior level managers on the job market will consider
foreign multinationals that have a reputable global presence and an established
brand, if they are prepared to support them and the lifestyle they are
accustomed to – which doesn’t come cheap," says Cambron.

Second,
western firms will need the assistance of a recruitment firm that understands
the culture, market and psychology of Japanese candidates. "As Japanese
people typically don’t register with headhunters, we have to be more proactive
in searching the market," says Gibson. "It is not like the west,
where you can pick up the phone and have a chat to see if you can gauge
interest, as most people aren’t receptive to these calls. That said, things are
slowly changing. But it is hard work, you have to work on a pitch by picking
out attractive parts of a job that will get people hooked. It’s an arduous
task, which is why most firms seek the assistance of a recruitment
consultancy."

The
other option is to seek the help of outplacement firms. "Not only do we
know what talent is available," says Cambron, "but because of the
face issue, outplacement companies like us are increasingly doing the
networking with potential employers on the behalf of an individual. Of course,
it is important to be patient too, as the process can take months."

The
ease with which a western company will attract recruits will depend on its
ability to sell the firm and its commitment to Japan, which is why it is
important for the company’s president or chief executive to be involved in the
hiring process – at least for key senior appointments. "They will be
looking for some stability. Unlike westerners, Japanese people are more risk-averse,
and likely to do a more thorough due diligence. They’ll want to know just how
committed the firm is to Japan," says Richards. "They will want to
see facts and figures, showing the company’s achievements to date globally, as
well as projected figures for Japan."

You
cannot pretend to offer lifetime employment either. "It takes guts to join
a foreign firm in Japan, so it’s important to be transparent. Plan the exit as
well as the entry and structure the reward programme to factor in some kind of
redundancy package should things not go to plan," says Richards.
"This way, when a prospective candidate tells their family they are
contemplating a move to a western firm, at least they can say, ‘here is the
deal’."

Finally,
no matter how desperate they are to find a job, "it is rare that a
Japanese person will take on a position that is less in status and money than
their previous employment," says Cambron. "It is a face issue. So you
need to be receptive to changing titles and increasing salary if you want them."

Western
companies entering the Japanese market should:


Be sensitive to Japanese culture and history in terms of employment


Consider localising its subsidiary with local Japanese employees who already
have huge business networks and know the Japanese business culture

 – Offer a higher salary and more appealing
compensation packages than Japanese counterparts

 – Offer stability and security, including a
back-up plan should the company fail

Further
information

Robert
Walters International – www.robertwalters.com

DBM
www.dbm.com

Suddenly
Global – lance@suddenlyglobal.com

Japanese
Corporate Information – www.corporateinformation.com/jpcorp.html

Japanese
Federation of Economic Organisations (Keidanren) – www.keidanren.or.jp

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