Japan’s Lifetime Jobs Still the Norm
When Akira Ohtomo decided to leave Canon after 14 years with the Japanese camera maker, his boss called a special board meeting. It was virtually unheard of then as well as now for a Japanese executive to abandon his company--especially for a U.S. firm.
“The decision to make a change was not easy,” Ohtomo said during a recent interview, recalling his move 20 years ago. “It was difficult, but fortunately my boss was very understanding. He called a board meeting, which was unprecedented, and said ‘Ohtomo wants to go to America, and I want to watch him for the next 10 years.’ ”
Ohtomo hopes he can convince other Japanese executives to buck the tradition of lifelong employment at one company. Ohtomo, who has held executive positions at Pfizer (Japan), Coca-Cola Japan and, most recently, as chairman of Nippon Polaroid, is the first president and representative director of the new Tokyo office of New York-based Spencer Stuart & Associates, a U.S. executive recruiting firm.
His goal: To recruit Japanese executives for U.S. and European firms doing business in Japan.
Ohtomo conceded that he is up against the Japanese cultural stigma attached to leaving a company before retirement. The Japanese place a tremendous sense of belonging and loyalty in working for one firm. Leaving a firm is typically considered a disgrace unless a worker is departing to carry on a family business or to study abroad.
‘Mental and Cultural Obstacles’
“This is where we come in to ease the mental and cultural obstacles,” Ohtomo said. Spencer Stuart, which has annual billings of more than $35 million, operates a total of 30 offices--21 of which are located outside the United States. Los Angeles-based Korn/Ferry International was the first U.S. recruiting firm to open an office in Tokyo.
Ohtomo, who speaks English fluently and has traveled and studied abroad, admitted that he is not typical of the average Japanese businessman. “I’m a Japanese in an American corporation. I know both cultures.”
He maintained that the taboo against leaving a firm “is gradually changing.” The practice of lifetime employment is a postwar phenomenon that helped Japanese companies recruit college graduates to rebuild Japan after the war. Ohtomo said many older Japanese managers are known as mado giwa, or window-side managers, which means that “they have a nice view at a desk near a window with nothing to do but read a newspaper,” he explained.
Over the last 10 years, however, a number of companies have introduced early retirement programs to provide graceful exits for their managers, but few snap up the opportunity. The retirement programs coincide with Japan’s need to diversify and restructure as its industrial and economic growth has slowed. Its current system of management by seniority may not suit its future needs.
Morgan H. Harris Jr., managing partner for Korn/Ferry’s Pacific Rim operations, shared Ohtomo’s views. “There is hidden unemployment in much of Japanese enterprise,” Harris said. He said it used to be easy for Japanese firms to transfer underutilized executives from one subsidiary to another.
“With current conditions, they just can’t do that. People in lifetime employment are much more receptive to opportunities from (non-Japanese) multinationals, which pay two to three times more than the Japanese pay. Tradition can only count for so much.”
Help Gain Access to Japan
These Japanese managers could help foreign firms understand and gain access to the Japanese market.
“From our standpoint, the market is opening up,” explained Daniel C. Wier, the Los Angeles-based managing director of the Western region of Spencer Stuart. “The domestic Japanese market is going to be a freer market. It will not happen overnight, but there are signs already that it is opening up.”
The key to success in Japan, according to Ohtomo, is sensitivity to the Japanese way of doing business. “Knowledge of the Japanese language alone does not equate to knowledge of the (business) culture. It is more important to know the culture than language.”
For example, Ohtomo said, Western businessmen always want a contract. In Japan, he says, a handshake usually ties up a deal. As a result, the number of lawyers in Japan--which has half the population of the United States--is fewer than the total number of attorneys practicing in the state of Massachusetts, he said. Ohtomo also said a major difference is that Japanese businesses think long term--five to 10 years--whereas American executives think of the short term--quarterly and even weekly.
Perks for Japanese executives are somewhat comparable to U.S. standards. But Ohtomo said an executive’s actual cash compensation may be less because earnings over $200,000 are heavily taxed in Japan. So companies provide executives with subsidized housing, chauffeured cars, country club memberships and discount programs for houseware goods.
