The Road From Tokyo to L.A. Can Be a Rough One : Unprofitability, Unhappy Employees Just a Few of Persona Inc.'s Problems
Muneaki Ueda’s resume doesn’t read like that of a typical hire for a Japanese firm.
Trained as a pharmacist at Toyama University, near the Sea of Japan, he went off after graduation in 1971 to be a YMCA volunteer, helping Chinese refugees in Hong Kong, and later was a Red Cross worker in Vietnam.
He returned to Japan, worked a dozen years for Midori Manufacturing, then switched companies--unheard of among career men in Japan until recently.
Today, the 40-year-old Ueda is president of Persona Inc., the U.S. subsidiary of a Tokyo company called Temporary Center, Japan’s largest temporary services company. Persona hopes to become a major force in supplying temporary workers and recruiting executives in the U.S. workplace.
It is one of at least two big Japanese companies moving into the U.S. personnel industry, one of the fastest-growing service fields in the States. Recruit, the Japanese company troubled by a recent stock scandal involving politicians, is also trying to get into the U.S. recruiting business with its Interplace subsidiary.
Takes the Long View
But Persona has yet to turn a profit in the United States. And its U.S. competitors--hich include Manpower, Talent Tree, Kelly Temporary Services--aren’t looking over their shoulders yet.
“We’re still a baby, we’re still learning,” explained Ueda, who works out of spacious offices on the ground floor of the Wells Fargo Building in downtown Los Angeles. He oversees Persona in a freewheeling, entrepreneurial style, which he credits to Yasuyuki Nambu, well known in Japan for his founding of Temporary Center 13 years ago.
Accused of Bias
“Keep watching them,” said Richard O’Neill, president of Palisades Pacific Group consulting firm in Santa Monica. “Persona has a classical long-term point of view. They are very patient. They will make mistakes, but they will learn from them and adapt. These people are very adaptable,” said O’Neill, who sold a 50% interest in his firm to Persona last year.
But Ueda hasn’t managed to escape a problem common of other Japanese firms in the United States: disgruntled American employees. A small group of unhappy American employees at its Westwood office has accused Persona of discriminatory and racist practices. Ueda denies it all, attributing the misunderstandings to personality conflicts.
Self-assured, open and unencumbered by the protocol of corporate Japan, Ueda epitomizes the new, younger generation of Japanese executives. “He is a pretty unique individual, different than most Japanese, he’s much more aggressive,” said Joseph Lee of Financial Forecasting Group, who has worked with Ueda.
Ueda, who talks enthusiastically about his failures and lessons learned from them, claims to have started 14 businesses at Temporary Center since he joined the firm in 1983. “My big failure was producing small, one-person cars,” he said with a big smile. “It was called Temporary Car and, actually, it was temporary.”
Temporary Center’s founder, according to Ueda, “doesn’t mind any failures. He believes a business depends on a person. In order to improve the person, failure is the best textbook.”
But, he added, “in Los Angeles, I’m not allowed such big failures. I have to be much more careful.”
Since 1985, Persona has invested about $4.5 million in the United States and embarked on an expansion program. Ueda has opened 10 personnel services offices--eight in Southern California, one in San Francisco and another in New York.
Initially, the firm catered to supplying temporary workers to Japanese firms. Now Persona has added American clients and is branching out into executive recruiting. Still, Persona’s job bank of 14,000 applicants, 700 of whom are dispatched to jobs daily, is smaller than the average roster for local U.S.-based temporary service companies.
In addition to personnel services, Ueda has taken Persona into a variety of U.S. businesses, including a Manhattan restaurant, a real estate subsidiary, a vocational travel school, a language school, a secretarial school called Career Blazers, a classic car exporting company and a Pasadena newsletter on California biotechnology developments.
“A lot of his people wish he would slow down and think about what he has done,” explained one company insider who asked not to be identified. “He starts things, but he’s not a good finisher. He likes to buy companies, but he doesn’t like to get into the nitty-gritty of running them.”
Persona is losing money although revenue totaled just under $12 million in 1988. The idea is to forgo profit to build market share. Persona’s parent company had annual revenue of $420 million, 70% of which was earned from supplying temporary employees--almost all women--in Japan. The Tokyo company has 1,100 corporate employees and 90,000 registered temporary workers--40,000 are working on any given day, Ueda said.
Temporary Center’s other business includes 56 subsidiaries, as varied as aerobics classes, orchid imports, and sculpture leasing and sales.
“TC’s goal is to be a big business--a conglomerate,” Ueda said. “The plan is to have four core businesses.” One is personnel services, the other three are to be identified from the hodgepodge of different businesses.
Persona’s problems at its Westwood office may have resulted from poor planning and management. The office was to provide personnel services and house two start-up businesses: Christopher Columbus Travel School and Business Language Institute.
Persona has temporarily closed its personnel office because of staff problems and is reviewing both schools, which have been troubled by delays, low enrollment, high fees, poor location and inadequate parking.
“Westwood is such an obvious blunder for Persona,” said Mitch Lee, a former assistant to Ueda and former sales manager at the Business Language Institute who quit in January.
Ueda has hired a Phoenix consultant to study the two schools and make recommendations. Meanwhile, the director of the Business Language Institute went back to Japan and Ueda is running the school himself.
O’Neill, who has worked with problems of foreign-based companies, said Persona is a rapid-growth company. “Believe me, if you go into any Silicon Valley growth company, invariably it outstrips its initial management.”
His experience with Persona has been positive. “Our sales have doubled, we’re profitable, we have five or six enterprises going right now, all are making money. It has worked very well for us.”
Ueda says what has happened at Westwood is unfortunate. “I cannot blame anyone. I can only blame myself.”