Routine Matters Bring to Fore the Culture Shock U.S. Workers Face at Japanese Brokerages : Clash

It wasn’t the language barrier or some intractable misunderstanding that symbolized being an American working for the Japanese at Daiwa Securities America.

It was the time that one of the American professionals at the Japanese securities firm wanted to take a Wednesday off.

“In Japan, holidays are really pre-set and hard to change,” explained Mary C. Horne, who as a fluent speaker of Japanese and one of Daiwa’s higher-ranking American traders acts as a cultural buffer between Japanese managers and American workers. “It’s the really routine things that tend to upset the apple cart.”

In the securities industry, the apple cart is bigger than ever before. Since 1985, Japanese securities firms have hired hundreds of Americans in New York: professional traders who were trained by American brokerages and commercial banks, brokers who matured selling U.S. securities to American institutional clients and executives who moved up the promotion ladder acquiring ever more responsibility and independence.

All face culture shock. On Wall Street, Americans are accustomed to changing from one specialty to another only after long planning; at the same time, switching employers is commonplace. The Japanese do things quite differently: In Tokyo, brokers are asked to jump among trading and sales desks at a moment’s notice--but they rarely switch employers.

“There’s a certain kind of arbitrariness in Japanese management from the employee’s standpoint,” said Stephen H. Axilrod, who became vice chairman of Nikko Securities International, the big Japanese firm’s American subsidiary, after 34 years at the Federal Reserve Board. “In Japan they change people’s jobs without warning. One day you’re a trader, the next you’re selling equities. . . . I think senior management here now understands you just don’t do this.”

The Japanese firms treat their Japanese and American professionals differently in promotion, compensation and assignment. Japanese traders, salesmen and other professionals are regarded as permanent employees of the parent firms in Tokyo, rotated into New York on two- or three-year tours. Their pay generally is set at a different scale--40% lower or more, by some accounts--from that of their American colleagues.

Many American employees are learning Japanese on the reasoning that bilingualism will be a prerequisite for advancement. “We must understand the Americans’ culture, and they must understand ours,” said Toshio Mori, chairman of Nikko International.

Scott Pardee, a former Federal Reserve Board official who is vice chairman and the top U.S. executive at Yamaichi International (America), said: “I’m studying Japanese, as are a number of others here, because to be a manager here (in the future) you’ll have to know both languages.”

So many of Yamaichi’s youngest American employees have learned the language that he often finds himself the only monolingual person in sizable mixed groups of Japanese and American employees. Yet, Pardee added, all American workers face a distinct ceiling on their opportunities for advancement. “This firm,” he said, referring to the American unit, “will always have a Japanese chairman.”

Nikko’s Axilrod said the situation is similar at his firm. “You have to be either a more adventurous soul to work here, or more timid--that is, be content to find a niche.”

At the same time, Japanese managers from the start ceded many important duties to their top American employees. One was personnel.

“It’s very difficult for Japanese management to assess American people,” Axilrod said. “It’s hard for them to tell if someone’s phony or for real, or just coming for the short term rather than joining us for the long haul. They just don’t pick up the signals.”

The “big four” Japanese securities firms--Nomura, Daiwa, Nikko and Yamaichi--have had rump U.S. branches for years, in some cases for several decades. But their rapid growth began after 1985, when they started hiring top-level U.S. executives and giving them the responsibility of establishing credible trading and research departments staffed largely by Americans.

The Japanese presence in worldwide capital markets is now so strong that few professionals can imagine when it was insignificant. But old-line American executives recall the culture shock of joining what 10 years ago were distinctly remote outposts.

“I came here as an executive vice president,” said Paul H. Aron, the long-term top-ranking American at Daiwa’s U.S. operation and the unofficial dean of U.S. executives at the Japanese firms. “That meant I had total supervision of myself. I shared a secretary with the chairman and the head of corporate finance, and she had plenty of free time.”

Before moving into emeritus status at Daiwa Securities America earlier this year, Aron as vice chairman had built the wholly owned subsidiary into a firm of 420 employees.

Top American executives at all the Japanese firms say they generally have had to educate Japanese superiors about the appropriate treatment of American workers. In fact, some American executives say they have had to fight to alter Japanese management habits.

Just as intense is the need to educate American employees about the cultural differences they face in working under and alongside Japanese.

“I served as the padre for the American guys who came in,” Aron said. “I would have to explain, this is the way the Japanese think. It was a very major thing.”